| Report: China says it has no plans to tax capital gains |
SHANGHAI, Feb. 28 (AP) -- Chinese regulators shifted into damage control Wednesday, with a government-run newspaper denying rumors of plans for a 20 percent capital gains tax on stock investments -- thought to be a key factor in the markets' plunge the day before.
The government has no plans to levy a tax on capital gains from stocks, the Shanghai Securities News said in a front-page report, citing unnamed spokesmen for the Ministry of Finance and State Administration of Taxation.
The newspaper, run by the official Xinhua News Agency, is often used for official announcements.
The report came a day after Chinese shares took their biggest tumble in a decade, with benchmarks for both the Shanghai and Shenzhen exchanges falling by nearly 9 percent.
The plunge triggered losses worldwide, with Wall Street seeing its most dismal trading day since the Sept. 11, 2001, terrorist attacks. The Dow Jones industrial average lost 416.02, or 3.3 percent, to 12,216.24. Key European exchanges also fell about 3 percent.
The bloodletting continued into Wednesday. Australia's benchmark S&P/ASX200 index slumped 3.45 percent in the first 30 minutes of trading.
The exact cause of Tuesday's sell-off in China was unclear. Some analysts blamed profit taking following recent gains: the market had hit a fresh record high on Monday, with the Shanghai Composite Index closing above 3,000 for the first time.
Others pointed to comments by former Federal Reserve Chairman Alan Greenspan, who warned in comments to a conference in Hong Kong that a recession in the U.S. was "possible" later this year.
Coupled with those factors was a persisting expectation that China might impose further austerity measures, such as an interest rate hike, to cool torrid growth: China's economy grew 10.7 percent last year -- the fastest rise since 1995 -- and a recent central bank report forecast it would expand 9.8 this year.
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