Tax rumors "hit" Hong Kong stocks unexpectedly! Institutional interpretation: excessive speculation, credibility is extremely low

Tax rumors "hit" Hong Kong stocks unexpectedly! Institutional interpretation: excessive speculation, credibility is extremely low

This Tuesday, the Hong Kong stock market was hit by sudden tax rumors, causing a collective plunge in internet technology stocks. Several securities firms quickly responded, stating that the related rumors are excessively extrapolated and do not hold up in terms of tax categories, legal, or policy logic, thus extremely unreliable.

The Hang Seng Tech Index originally followed overseas markets to strengthen during the morning session, but around 10:50 am suddenly plummeted, with the drop once expanding to 3.37%. By midday, it was down 1.31%. Kuaishou once fell more than 7%, Bilibili, Baidu, and Tencent Holdings each fell more than 6%, and Alibaba was down nearly 5% at one point.

The market panic stemmed from a rumor that "China will adjust the recognition standards for high-tech enterprises and introduce new tax policies," involving possible increases in tax rates for the financial industry and internet value-added services. Huachuang Securities believes the rumors are overinterpreted, have no solid basis, and contradict the general direction of promoting consumption. Everbright Overseas further pointed out that the rumor does not hold up in tax category, legal or policy logic, and is extremely untrustworthy.

Rumor Reappearance Triggers Market Volatility

The main reason for the market sell-off was a tax rumor. During the drop in internet giant share prices, news about possible increases in VAT rates for financial and internet value-added services (such as in-game purchases and advertising) spread widely, with rumors even drawing parallels to the high tax rates in liquor.

Analysts point out that such "short essays" have circulated in the market more than once. Various versions have been around since 2019, but none have materialized. Last year, foreign media reported similar stories, but these were also not implemented.

Regarding the rumor about "game tax rates approaching liquor's 32%", Everbright Overseas noted that this is a basic error.

The 32% tax rate applicable to liquor is a consumption tax (ad valorem tax combined with specific tax), while in-game purchases and advertising services are subject to VAT. Their tax logic and legal basis are completely different; there is no basis for ‘approaching’ each other.

Under the current legal framework, financial, gaming and advertising all fall under the "modern services" subcategory for VAT, with the statutory rate at 6%. Under the VAT Law of the People's Republic of China effective January 1, 2026, tax brackets are clearly defined as 13%, 9%, and 6%. The recent Ministry of Finance and State Tax Administration Announcement No. 9 of 2026 only involves basic telecom service tax rate adjustments, with no mention of financial or internet value-added services.

Institutions emphasize that any tax rate adjustment requires rigorous legislative or administrative procedures, never at the whim of market speculation, and there is no policy basis for raising the tax bracket of these industries.

Moreover, future tax regulation is more likely to involve verification and cleanup of some companies’ tax preferential qualification (such as high-tech enterprise status), rather than directly raising statutory tax rates. Such impacts are limited and controllable.

Policy Logic: Tax Increase Contradicts Macro Direction

Aside from legal constraints, many analysts believe the rumor does not add up from an economic logic perspective.

Huachuang Securities points out that if internet companies face higher taxes, costs are likely to be passed on directly to end consumers, which goes against the national policy of promoting consumption and cannot be logically extrapolated.

Everbright Overseas further analyzes that, the current macro policy focus is "stabilizing growth, promoting innovation, and supporting industrial upgrading." The platform economy and game exports are key supported areas. To impose sweeping tax hikes on critical industries at this time would be contrary to overall policy direction. Although there is room for discussion regarding tax burdens in the financial sector, regulatory thinking leans toward optimizing deduction rules and other structural adjustments, rather than bluntly raising tax rates, so as not to impact credit supply and financial stability.

Valuation and Outlook: Long-Term Logic Remains Unchanged

Despite short-term sentiment disturbances, the fundamental valuation of the Hong Kong stock market remains attractive. As of January 30, 2026, the price-to-earnings (PE) ratio and price-to-book (PB) ratio of the Hang Seng Index are 12.47 and 1.27 respectively, placing them at the 82nd and 63rd percentiles since 2010. Meanwhile, the risk premium for the Hang Seng Index is 3.76%, indicating a strong investment cost-effectiveness.

Galaxy Securities believes tech remains the main line for mid- to long-term investment, and with the backdrop of industry chain price increases, domestic substitution, and accelerated AI adoption, it is expected to rebound. GF Securities suggests that, with the USD cycle fading and the RMB modestly appreciating, Chinese equity assets are in a favorable repricing window. On Hong Kong stocks, investors can focus on the inflow of southbound capital and valuation discounts, prioritizing allocation of tech leaders and internet platforms that combine dividend capability and growth attributes.

Risk DisclaimerThe market has risks; investments require caution. This article does not constitute individual investment advice, nor does it take into account the specific investment objectives, financial situation, or needs of any particular user. Users should consider whether any opinions, viewpoints, or conclusions in this article suit their specific circumstances. Investment decisions made accordingly are at your own risk.