Economy

The bank has also stopped paying for some work-related expenses and other benefits at its Beijing branch, the bank’s largest with more than 4,000 employees, as part of the broader salary cuts, one of the sources said.The measures, which have not been reported previously, have been implemented across the board at the Beijing branch, said the source. It was not immediately clear if Minsheng Bank would implement these measures at its other branches.The up to 50% pay cut is the largest such reduction at a major Chinese commercial bank in recent years. Both the sources declined to be named as the information was not public. After the Reuters story was published, Minsheng Bank said the “information was false”, but did not elaborate. China’s banking sector regulator, the National Financial Regulatory Administration (NFRA), did not immediately respond to Reuters’ request for comment.’COMMON PROSPERITY’The pay reduction fits with China’s “common prosperity” drive, which was launched in 2021 to address social and income inequality as growth slowed in the world’s second largest economy. Financial firms in China, both state-owned and private, have implemented measures, including cutting salaries and bonuses, and asking staff not to wear expensive clothes and watches to work.China Construction Bank (OTC:CICHF) Corp (CCB), the nation’s third largest commercial bank by assets, has asked employees at its headquarters to take a pay cut of at least 10%, Reuters reported in July.China Merchants Fund Management, a top 10 fund manager, has asked senior executives to return pay received over the last five years that exceeds a new cap, Reuters reported earlier this month.The pay cuts at Minsheng Bank also reflect profitability concerns as Chinese lenders come under pressure to lower lending costs to stimulate a economy that is verging on deflation and faces a prolonged property crisis. Chinese banks’ net interest margin stood at 1.54% at the end of June, the lowest on record, official data showed.Minsheng Bank is a second tier, joint stock bank. It had 7.7 trillion yuan ($1.1 trillion) in total assets at the end of last year, marking the 11th largest among China’s about 4,600 banking institutions.Founded in 1996 as China’s first privately controlled commercial bank, Minsheng Bank has been hit hard by the nation’s ongoing property crisis. The lender was a major creditor of China Evergrande (HK:3333) Group, which has been at the centre of the country’s property sector crisis. It has also been hit by the financial difficulties of developer China Oceanwide, one of the bank’s biggest shareholders.In the first half of this year, Minsheng Bank’s net profit fell 5.5% year-on-year. Its non-performing loan ratio of real estate loans was 5.29% in the first half of this year, up from 4.92% in 2023.($1 = 7.0530 Chinese yuan renminbi) More

(Reuters) -U.S. stock index futures edged lower on Friday, pausing after the previous session’s rally set Wall Street’s main indexes on track for weekly gains following the Federal Reserve’s pivotal stance on monetary policy earlier in the week.The S&P 500 notched its eighth session of gains out of nine on Thursday and closed at an all-time high, breaching its earlier milestone from mid-July. The blue-chip Dow also clinched a record high and settled above the psychological level of 42,000 points.The indexes along with the tech-heavy Nasdaq are on track for weekly gains of over 1%. The S&P 500 is set to buck the historical trend of September being weaker for U.S. equities on average.At 7:12 a.m. ET, Dow E-minis were down 7 points, or 0.02%, S&P 500 E-minis were down 18 points, or 0.31% and Nasdaq 100 E-minis were down 101 points, or 0.50%.Risk appetite got a boost earlier in the week after the Fed kicked off its easing cycle with an oversized 50-basis-point cut and assured that more were on the way. The central bank also projected a period of steady economic growth and low unemployment and inflation.”We appear to be in the benign scenario where the Fed is cutting rates outside of a recession. Historically, that has been a very good combination for equities,” analysts at Deutsche Bank said in a note.Traders now see a 59.7% probability of a 25 bps cut in November, as per the CME Group’s (NASDAQ:CME) FedWatch tool. Expectations are that rates will drop by 72 bps by year-end, as per LSEG data.Investor focus will remain on remarks from Philadelphia Fed President Patrick Harker later in the day in the absence of major economic data.Some market volatility is expected in the day, as options and futures linked to stock indexes and individual stocks are set to expire simultaneously on the third Friday of the last month of the quarter, in an event called “triple witching”. Among top movers in premarket trading, FedEx (NYSE:FDX) plunged 13.1% after the postal service company, often seen as a bellwether to the U.S. economy, reported a steep drop in quarterly profit and lowered its full-year revenue forecast. Rival United Parcel Service (NYSE:UPS) slipped 2.6%. Nike (NYSE:NKE) jumped 6% after the sportswear giant said that former senior executive Elliott Hill will rejoin the company to succeed John Donahoe as president and CEO. Trump Media & Technology shares, majority owned by former U.S. President Donald Trump, fell 4.2% after the expiry of its lock-up period that lifts restrictions on insiders to sell the company’s stock.A rebalancing of the main indexes is also expected. Dell (NYSE:DELL) dipped nearly 1%, Palantir Technologies (NYSE:PLTR) fell 2.2% with the stocks expected to join the S&P 500 before the market opens on Sept. 23.Globally, investors mulled whether the world’s dominant economy is set to boom or face a recession. Central banks in the UK and Japan took a more cautious stance on interest rates, days after the Fed’s verdict. Historically, equities have performed well in a rate cutting cycle as lower borrowing costs could ease pressures on corporate profits. However, the outlook appears bleak with the S&P 500’s valuations high above its longterm average. More

According to LSEG data, investors acquired a net $5.21 billion worth of equity funds during the week following $6.54 billion worth of net purchases in the week before.The U.S. Federal Reserve cut its benchmark policy rate by an unexpectedly hefty 50 basis points, which bolstered riskier assets around the world, including stocks and commodities. Asian equity funds attracted net investments for the 16th consecutive week, totaling approximately $2.77 billion. European funds also saw significant inflows, drawing $3.29 billion net investments, while net sales in US funds decreased to a four-week low of $1.37 billion.Sector funds experienced net withdrawals for the third consecutive week, totaling approximately $1.2 billion. The financials and tech sectors led these outflows, with net sales of $950 million and $606 million, respectively.Investors divested about $16.06 billion worth of money market funds after a six-week net buying streak, underpinning the rise in investor risk appetite.Global bond funds attracted inflows for the 39th consecutive week, garnering a net $11.24 billion.Global short-term bond funds received $2.3 billion, following net purchases of $2.65 billion a week earlier. High-yield funds also drew $1.71 billion in inflows, although investors withdrew about $218 million from government bond funds.Gold and other precious metal funds maintained their appeal for a sixth consecutive week, attracting about $544 million in net purchases, while energy funds reversed a four-week inflow trend, with net sales amounting to $129 million.Data covering 29,544 emerging market funds showed equity funds experienced a 15th weekly outflow at a net $293 million. In contrast, bond funds secured $416 million, posting a 13th successive week of inflows. More

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WARSAW (Reuters) -Polish Finance Minister Andrzej Domanski said on Friday a pledge worth 5 billion euros ($5.6 billion) from the European Union to help the country recover from its worst flooding in at least two decades may not be enough to cover its losses.The worst floods to hit central Europe in recent memory have caused widespread damage in Poland, the region’s main economy, with some analysts saying the final cost could be on a par or even exceed that seen after devastating floods in 1997.European Commission President Ursula von der Leyen said on Thursday the EU would make billions of euros available to help central Europe recover from the severe floods.”We know that the losses are very large, very high, although we do not know the exact number yet,” Domanski said in an interview with private broadcaster TVN24.”So I think that this amount, these 5 billion euros for Poland is an adequate amount. It does not mean at all that it is an amount sufficient to cover all the losses.”Domanski declined answer questions on how much of the total damage the EU’s pledged funds – worth some 0.6% of Poland’s 2024 economic output – would cover.”I’m not sure. The damage assessment is ongoing,” he said.In 1997, massive flooding devastated south-western Poland, causing some 12 billion zlotys in damage, or 34 billion zlotys in today’s prices.Infrastructure development in the past three decades has increased the scale of damage in the affected area, Polish economist Slawomir Dudek wrote on social media platform X earlier this week.He said Poland might be forced to amend its 2024 budget once the final cost of the deluge emerges.Poland, which forecasts its general government deficit at 5.7% of gross domestic product in 2024 and 5.5% in 2025, has been tasked by Brussels with reducing the shortfall to the bloc’s 3% limit in the coming years.Domanski has previously signalled he was in favour of a four-year deficit reduction path.”I will fight for this path of fiscal adjustment, that is limiting the deficit in the coming years, to be as gentle as possible, adapted to the exceptional situation in which Poland finds itself,” he said.Warsaw has cited increased defence spending following Russia’s invasion of Ukraine, in addition to the COVID-19 pandemic and energy price shocks in recent years, as the main cause for its elevated deficit levels.($1 = 0.8959 euros) More

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BENGALURU (Reuters) – The U.S. Federal Reserve will cut the federal funds rate by 25 basis points in both November and December, according to a strong majority of over 100 economists in a snap Reuters poll.The central bank started cutting rates on Wednesday with a larger-than-usual half-percentage-point reduction, which Fed Chair Jerome Powell said showed commitment to keeping unemployment low as inflation eased back toward the 2% target.This week’s half point cut was mostly expected by market pricing, but was forecast by only 9 of 101 economists surveyed before the decision.Some of those economists have challenged the clarity of the Fed’s pre-meeting communication given the economy is performing strongly and gradually rising unemployment is still relatively low at just 4.2%.The latest survey suggests the central bank will get very close to the neutral rate of interest, which neither restrains nor stimulates the economy, by this time next year.Over three quarters of economists, 86 of 107, saw rates falling by another 50 basis points this year to a 4.25%-4.50% range, in quarter-percentage-point reductions at the November and December meetings.That was shallower than a cumulative 75 basis points more priced in by markets, but is in line with the median from the Federal Open Market Committee’s own dot-plot projections. Sixteen economists predicted the Fed will cut 75 basis points more this year, while five said just 25.The Fed will deliver 50 basis points of cuts in the first quarter of 2025 followed by 25 in the following two, poll medians showed, inferring a total of 100 basis points of reductions next year, to a 3.25%-3.50% range.David Mericle, chief U.S. economist at Goldman Sachs, sees that rate being reached slightly sooner.”The greater urgency suggested by…(the) 50bp cut and the acceleration in the pace of cuts that most (policymakers) projected for 2025 makes a longer series of consecutive cuts the most likely path,” Mericle wrote in a research note.”We have therefore revised our Fed forecast to accelerate the pace of cuts next year and now expect a longer string of consecutive 25bp cuts from November 2024 through June 2025, when the funds rate would reach our terminal rate forecast of 3.25%-3.50%.”The Fed’s long-run assessment of the “neutral” rate is 2.9%, which would not be reached until 2026, according to the dot-plot projections.”We remain of the opinion that the main risk to our view is around Fed leadership finding the need to go back to its neutral stance much sooner than they currently anticipate, as both sides of the mandate are already back to or within reach of their steady state,” said Oscar Munoz at TD Securities.The Fed’s new economic projections showed the unemployment rate, at 4.2% in August, ending this year at 4.4% and remaining there through 2025.”Unless the unemployment rate goes above 4.4%…they would be more inclined to step down to 25 basis point cuts. So, it does set a fairly high bar for them to do further aggressive cuts,” said Jonathan Millar, senior U.S. economist at Barclays.Asked to rate the Fed’s communication over the past few months, economists were nearly split. Although 23 respondents said the communication was clear, 21 said it was not.(Other stories from the Reuters global economic poll) More