Asian stocks were mixed in the afternoon session Thursday with Japan and Australia closing lower. But the Shanghai market took centerstage, surging as much as 9.5 percent at one point after a stamp duty tax cut gave flagging Chinese stocks a boost.
Investors though, were still anxious about rising inflation in Asia, daunted by the soaring price of rice, which hit a record high. Markets made a cautious and slightly negative start to the session until the Shanghai Composite Index opened 8 percent higher on the strength of a cut in stamp tax. The index closed 9.3 percent in the green.
The stock-trading tax was cut to 0.1 percent from 0.3 percent, in the hopes of bolstering Chinesemarkets which have been in freefall for three months. The long-rumored stamp tax cut took effect today.
Investors have been pushing for such a move, with the Shanghai Composite Index down 51 percent from its peak last October. The cut returns the stamp tax to its level last May, when the government raised it to cool the market, which had been surging in a two-year bull run that ultimately boosted the key index nearly six-fold.
Shanghai's surge, which drove some stocks such as China Life Insurance to their 10 percent daily limits, initially injected some optimism into the Japanese market.