FTSE 100 bosses already top average annual UK wages in 2016

JAN 5, 20169:59 AM

[LONDON] Bosses in Britain's top companies will have earned more this year by the end of "Fat Cat Tuesday" than the average UK worker will throughout all of 2016, a think-tank said.

The High Pay Centre (HPC) said chief executives of firms on the London Stock Exchange's FTSE 100 index would bypass the average British salary on Tuesday, the second day back at work after the New Year.

They will have earned more than the UK average annual salary of £27,645 (S$57,930) by late Tuesday afternoon, said the group, which monitors pay at the top of the income scale in Britain.

"Fat Cat Tuesday again highlights the continuing problem of the unfair pay gap in the UK," said HPC director Stefan Stern.

"Over-payment at the top is fuelling distrust of business, at a time when business needs to demonstrate that it is part of the solution to harsh times and squeezed incomes, and is promoting a recovery in which all employees can benefit."

FTSE 100 chief executives were paid an average £4.96 million a year in 2014, and the HPC found that even if they are assumed to work long hours with few holidays, this is equivalent to hourly pay of more than £1,200.

The British government has brought in laws to curb executive pay and bonuses since the financial crisis. Shareholders now have a binding veto over executive pay policy.

Since 2013, big companies have also been obliged to be more transparent about the earnings of their bosses, who generally receive a base salary, bonuses, stock options and other compensation.

But the think-tank said the figures would raise questions about the success of government attempts to curb top pay.

The centre called for further measures, such as representation for workers on company remuneration committees that set executive pay, and publication of the pay gap between the highest and median earner within a firm.

Seema Malhotra, junior finance spokeswoman for the opposition Labour Party, called the widening pay gap "shocking".

"There is growing public concern about rising inequality and its impact on our social fabric. Such a gap cannot be right for Britain or for our long-term economic stability," she said.

Frances O'Grady, general secretary of the Trades Union Congress, a federation of British trade unions, said: "Every worker deserves a fair share of the wealth they help create.

"The government must start making the right choices to deliver a fair economy with fair pay, like giving workers more collective pay bargaining rights."

AFP

    
 

South Korea to take action if needed on China market turmoil: official

A South Korean finance ministry official said on Tuesday the government will take action to stabilise markets if needed, following a meeting of ministry officials the day after a steep plunge in Chinese stocks that led to a drop in the local bourse. 

PHOTO: REUTERS

JAN 5, 20168:52 AM

[SEOUL] A South Korean finance ministry official said on Tuesday the government will take action to stabilise markets if needed, following a meeting of ministry officials the day after a steep plunge in Chinese stocks that led to a drop in the local bourse. "There is a chance this global financial instability may be sustained and we will take action if necessary," said a senior finance ministry official to Reuters by telephone. "We feel however, the shocks in the Chinese markets will subside over time." The official added if the government takes action, it would likely be in the form of pre-existing measures and not new ones.

South Korea's main bourse dropped more than 2 per cent on Monday, marking its sharpest daily fall since August last year after China's major stock exchanges tanked on the first trading day of the year.

The won also hit a three-week low on Monday after foreigners dumped local shares for a 21st straight session that day.

To heighten monitoring and discuss possible measures to take against global financial volatility, the finance ministry and Bank of Korea held separate emergency meetings on Tuesday.

The Bank of Korea said it would closely monitor market movements at home.

Early on Tuesday, South Korean markets were steady with the KOSPI up 0.3 per cent and the won trading nearly flat against the dollar compared with Monday's onshore close.

REUTERS

      

China regulator may restrict stock sales by major shareholders

China's securities regulator said on Tuesday it is studying rules to regulate share sales by major shareholders and senior executives in listed companies. 

PHOTO: REUTERS

JAN 5, 201610:05 AM

[SHANGHAI] China's securities regulator said on Tuesday it is studying rules to regulate share sales by major shareholders and senior executives in listed companies.

The China Securities Regulatory Commission said that it would consider restricting the proportion of shares that major shareholders could sell during a given period of time.

China's stock market plunged 7 per cent on Monday, triggering a market circuit breaker.

The markets were down partly on concerns that a six-month ban on share sales by major shareholders would spark a sell-off when it expires on Jan 8.

REUTERS

      

 

China financial regulators support stocks with policy outlook, cash

Chinese regulators leapt to support stock markets early on Tuesday, the day after a major crash, with the central bank pouring cash into the money market system and the securities regulator suggesting it might restrict share sales by major shareholders. 

PHOTO: REUTERS

JAN 5, 201610:54 AM

[SHANGHAI] Chinese regulators leapt to support stock markets early on Tuesday, the day after a major crash, with the central bank pouring cash into the money market system and the securities regulator suggesting it might restrict share sales by major shareholders.

The unexpected 130 billion yuan (S$28.4 billion) injection by the central bank during open market operations - the largest such injection since September - appeared timed to reassure Chinese retail investors, who are always sensitive to liquidity signals, that the bank would support the market with cash.

China's securities regulator said it is studying rules to regulate share sales by major shareholders and senior executives in listed companies.

This would indirectly address concerns that the end of a 6-month lockup on share sales by major institutional investors - scheduled to free up an estimated 1.2 trillion yuan worth of shares for sale next Monday - would result in a massive institutional evacuation from stocks.

The China Securities Regulatory Commission also defended the functioning of the new "circuit breaker" policy that caused Chinese stock markets to suspend trade on Monday after markets fell 7 per cent, triggering the mechanism on the very first day it came into effect.

While some analysts criticised the design of the circuit breaker, saying it inadvertently encouraged bearish sentiment, the CSRC said the mechanism had helped calm markets and protect investors - although it said the mechanism needs to be further improved.

The measures appeared to have had some effect by mid-morning. While major indexes opened more than 2.5 per cent lower, they quickly recovered into positive territory.

REUTERS

      

China central bank suspected to have intervened to support yuan-traders

China's onshore yuan firmed against the dollar on Tuesday after suspected interventions from the central bank, three traders told Reuters. 

PHOTO: REUTERS

JAN 5, 201611:07 AM

[HONG KONG] China's onshore yuan firmed against the dollar on Tuesday after suspected interventions from the central bank, three traders told Reuters.

"It's quite obvious that the central bank has intervened in the market via big Chinese banks in the morning and trading was very active," said a trader at a Chinese bank in Shanghai.

The yuan closed at 6.5338 per dollar on Monday, but strengthend immediately after the opening on Tuesday and traded at 6.5197 by mid-morning.

China's forex and stock markets had plunged sharply on Monday in response to weak economic data, sparking a global sell-off of riskier assets.

In the offshore yuan market, where the central bank usually takes a hands-off attitude, the yuan remains weak and hit 6.6446 in early trade, the lowest level in more than four years.

REUTERS

      

China retools bank reserve ratio, casting doubt on more RRR cuts to stoke lending

As investors continue to grapple with China's economic slowdown, regulators may be taking away an old standby for monetary easing.

PHOTO: REUTERS

JAN 5, 201611:57 AM

[BEIJING] As investors continue to grapple with China's economic slowdown, regulators may be taking away an old standby for monetary easing.

The required reserve ratio (RRR) for commercial banks, a tool long used to add or remove liquidity, will increasingly be used instead as a lever for enforcing financial stability. That's according to a People's Bank of China announcement on Dec 29 describing a new Macro Prudential Assessment system, or MPA.

The idea is to use the ratio of deposits that must be held at the PBOC as a method for reining in risks. Exposure to stock and bond markets will be used in calculating ratios for individual banks, the PBOC says. Officials will also look at growth in lending, rates on loans and capital adequacy.

Among the potential implications: less likelihood of required reserve ratio cuts as a way of stoking lending growth amid the weakest economic expansion in a quarter century.

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China's main stock index tumbled so much on Monday that circuit breakers halted trading, offering a reminder of how poor sentiment is even after equities in recent months recouped some of last summer's rout. The PBOC injected liquidity on Tuesday through repurchase agreements, helping shore up some stabilisation in stocks.

"We'll see less across-the-board cuts" in the RRR, said Ming Ming, head of fixed income research at Citic Securities Co in Beijing who formerly worked in the PBOC's monetary policy division.

"The MPA framework signals policy makers will move away from universal reserve ratio changes to being in favor of using the tool to fine-tune requirements for individual banks." The change is part of a broader shift toward more flexibility with monetary policy tools as China tries to balance economic reforms with propping up growth. Central bank researchers have advocated setting up an interest-rate target similar to what the US Federal Reserve has used.

Ma Jun, the chief economist of the PBOC's research bureau, said in a commentary last Wednesday the central bank should set reserve requirements with short-term interest rate stability in mind and pointed to open market operations and other facilities to manage rates. China's 10-year bonds dropped the most in two weeks after Ma's comments damped speculation that lenders' required-reserve ratios will be eased further.

The required-reserve ratio forces banks to put aside a percentage of their deposits that they can't lend out, which directly affects the cash supply in the banking system. It's a monetary tool that the US Federal Reserve has long since stopped using to adjust liquidity in the economy. The PBOC currently pays a 1.62 per cent annual interest rate on banks' required reserves and 0.72 per cent on extra reserves parked at the central bank.

Chinese policy makers last announced a cut in the ratio for the biggest banks in October, reducing it to 17.5 per cent from 18 per cent, while also lowering the one-year lending rate, their main policy tool, to a record low 4.35 per cent. In a series of reductions, the central bank has brought the reserve ratio down from its 2011 peak of 21.5 pe rcent.

The easing underscored the determination of the country's leaders to meet their 2015 growth goal of about 7 per cent. The pace of expansion will slow to 6.5 per cent in 2016 and 6.3 per cent in 2017, according to the median estimates of economists surveyed by Bloomberg.

Market participants say short-term liquidity is tightening and capital outflows continue, making the PBOC more likely to add liquidity, according to a report on Tuesday by the official China Securities Journal, an affiliate of Xinhua News Agency. The participants, who weren't identified, said additional RRR cuts are necessary and feasible, the paper said. Economists had expected one more RRR cut by Jan 1, according to the median of estimates in a Dec 17 to Dec 22 Bloomberg survey.

The central bank said in its announcement last week it will use the new MPA system to examine banks' capital adequacy and watch financial institutions' interest-rate pricing, the monetary authority said last week. The PBOC will assess data quarterly, while monitoring and giving guidance to banks on a monthly basis.

The PBOC said the assessment "will change its focus from loans, which are narrowly defined, to a focus on credit in a broader sense." It will include bond investments, equity investments and buybacks of financial assets sold - which typically refers to banks' off-balance-sheet assets.

BLOOMBERG