Abolition Of Turnover Tax Stimulates Share Trading

There is every indication that the abolition of the 0.5 per cent turnover tax on share transactions that took effect on 1 October 1999 has had a positive influence on share trading. Since October, the trading volume on the Exchange has been significantly higher than before the tax was abolished, see attached graph. The average daily value of trading rose from DKK 1.5 billion and DKK 1.4 billion in August and September to DKK 2.4 billion in the period November to January (October 1999 was influenced by the realisation of a number of take-over bids). The value of shares changing hands reached yet another high in February with a daily average of DKK 3.1 billion. If you compare the period November 1999 - February 2000 with the corresponding period a year earlier the rise amounts to not less than 61 per cent. Commenting on the development, President and CEO Hans-Ole Jochumsen said: "Of course there are several factors which might have had a positive influence on the trading volume e.g. the sharp rises in prices, the new trading system, the influx of new member firms etc. However, the increase is so dramatic and virtually instantaneous and everything seems to indicate that the Government's removal of the turnover tax has been a deciding factor. A connection that investors also recognise. In Sweden the turnover tax was abolished at the beginning of the 90s and when I look at the outcome I am certain that the Danish Government's initiative will have a profound effect on the development and competitiveness of the Danish equity market."