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According to Bloomberg, even though Hong Kong’s stock market hit record highs this month, the turnover is too low. Now the exchange operator is considering asking the government to remove or reduce a tax on stock transactions.

1. What is the current stamp duty on both sides of the trade and what does that mean?
2. Do the U.S. and China impose similar levies on trades?
3. Why are penny stocks a drag on the Hong Kong market?
4. Why might removing the stamp duty attract traders that can resolve Hong Kong’s penny stock drag?

Ren, S. (2017). Hong Kong Should Abandon its Duty. Bloomberg, Oct. 16 (Retrievable online at