Beijing's tax increase impacts Shanghai Index

From Wall Street Journal,

The Chinese government's first direct action to trim a surge of stock-market investment offered another sign of Beijing's growing concern about the run-up and led to the market's second-biggest decline this year, but it may not be enough to cool things down.

Acting on orders from Premier Wen Jiabao's cabinet, China's Ministry of Finance early Wednesday tripled a trading transaction charge, called the stamp tax, to 0.3% from 0.1%, effective immediately. The government is keen to promote the healthy development of the country's securities markets, the official Xinhua news agency said.

In response, Chinese stocks marked a broad-based decline in heavy trading, as the benchmark Shanghai Composite Index finished down 6.5% at 4053.09. It was the worst performance since an 8.8% fall in the index on Feb. 27 that rattled investors world-wide. It was the second-biggest drop since 1999.

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The impact on US and other markets, thus far, has been somewhat muted. Or, as one WSJ report put it,

"Beijing may want to protect its burgeoning investor class from a major stock
correction, but regulators' latest attempt to tap on the brakes could wind up as
yet another bug splattered on the speeding market's windshield."