Nov 11 (Lagos) - How do you kill a raging bull market, one that is trying to bounce back after years of economic downturns, constant currency devaluations and erosion of buying power. How do you decimate something that is the one thing that people could feel happy about?
1) Reduce demand - make it unattractive by increasing the cost of investing. E.g. stamp duties, ad hoc charges.
2) Add unreasonable taxes - Increase capital gains tax to such a level that investors feel scared to invest and look for other places to invest where the authorities are reasonable.
3) Add political risk - political risk can be increased not only through insecurity but by uncertain tax regime. When people can no longer know when and what taxes the government will suddenly impose, they are not likely to invest their funds.
And you top it up by rubbing it in their face by giving them arguments that make no sense about how bad policies are going to be good for them.
Those things should do it. That would kill a bull market.
It is strange that some governments would want to do the opposite and pour fuel inside the bull market to make it move faster and higher.