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Thread: Interest tax VS stock market

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[quote=JOHNNY512,237977]On June 27, the standing committee of NPC discussed State Council's draft on decrease or stop imposing interest tax. On the same day, the shares in Shanghai and Shenzhen stock markets rised sharply and exceeded 4000 mark.

What is the relationship between the interest tax and stock market? It is strange that the shares rise when the interest tax decreases or stop being imposed. What is the interest tax's influence on stock market? Does decreasing or stop imposing the interest tax equal increase interest rates?

An security analyst say that decreasing or stop imposing interest tax seldom affect the stock market. Some people may change to save their money at banks. However, most of the investors will still choose to invest in the stock market. All in all, investing in the stock market can make money immdediately than savings.

More and more people are investing in the stock market. This causes excess liquidity and it is possilbe to ignite inflation. In order to control inflation and the bubble in the stock market, the interest tax will be decreased or stopped to impose sooner or later. The other way is to increase interest rates. The second has been proved ineffective.

In theory, decreasing or stopping imposing interest tax may help pull the capital from the stock market back to the banks. The reason is that saving is safer than investing in stock market.

Hope it goes on as people expect.

Compared with saving at banks or investing in the stock market, which one will you choose? Taking a risk or choosing to make money stably?

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