Business

China disappoints investors with ‘underwhelming’ decision on key interest rate

Published

1 year ago

August 21, 2023

Hong Kong
CNN
—

China has surprised investors by deciding not to cut an important interest rate that influences mortgages, in a move that economists say will make it tough to revive confidence in the country’s troubled real estate sector which has dragged down prospects for the world’s second largest economy.

The People’s Bank of China (PBOC) kept its five-year loan prime rate (LPR), which stands at 4.2%, on hold on Monday, while trimming its one-year loan prime rate by 10 basis points from 3.55% to 3.45%.

The cut to the one-year rate was widely expected, but the lack of action on the five-year rate was not. Nearly all of the analysts polled by Reuters had predicted that the five-year rate, which serves as the mortgage reference rate, would be reduced by at least 15 basis points.

The outcome was “underwhelming,” Julian Evans-Pritchard and Zichun Huang of Capital Economics wrote in a Monday research note.

“On its own, the latest round of cuts is too small to have a big impact,” the China economists wrote. “[This] strengthens our view that the PBOC is unlikely to embrace the much larger rates cuts that would be required to revive credit demand.”

The LPR sets the interest that commercial banks charge their best clients and serves as the benchmark for household and corporate lending. The one-year rate affects most new and outstanding loans, while the five-year rate influences the pricing of longer term loans, such as mortgages.

A reduction in the rate would lower the cost of borrowing for those taking out loans or paying down interest.

Stocks in Hong Kong and mainland China, as well as the Chinese currency, weakened on the news. Hong Kong’s Hang Seng

(HSI) traded 1.5% lower, falling deeper into a bear market, while the Shanghai Composite

(SHCOMP) was down 0.5%.

The Chinese yuan has lost nearly 6% against the dollar so far this year, as concerns swirl about the future of the Chinese economy, which reported another month of lackluster economic data last week.

Besides a crisis in the property sector, China is battling deflation, weaker exports and record unemployment among younger people.

‘Far from enough’

Economists had expected cuts to the loan prime rate after China made a surprise slash to another rate, its medium term lending facility (MLF), last week. It lowered that by 15 basis points, to 2.5% on Tuesday.

The loan prime rate is linked to the MLF, so new reductions Monday were “pretty much a given,” according to Capital Economics.

Even if the PBOC had met expectations by slashing rates as much as expected, it would have been “far from being enough to boost growth,” Goldman Sachs analysts said in a research note.

The People’s Bank of China (PBOC) building seen in May in Beijing.

Jiang Qiming/China News Service/VCG/Getty Images

The central bank said Sunday that it held a meeting late last week with state-owned commercial banks, government agencies and other institutions to discuss the policy support needed.

During the meeting, China’s economic recovery was described as coming in waves and part of a “zigzag” process, it said in a joint statement with the financial and securities regulators.

“Major financial institutions should take the initiative to act and increase loans, and large state-owned banks should continue to play a supporting role,” they said.

“We must pay attention to maintaining the pace of stable loan growth, properly guide credit fluctuations, and enhance the stability of financial support for the real economy.”

Growing headaches

Monday’s announcement adds to concerns over the state of China’s economy.

On Monday, UBS downgraded its economic forecast for the country, saying it now expects growth of 4.8% for 2023 and 4.2% for 2024. That compares with previous projections of 5.2% and 5%, respectively.

The downgrade was made “in light of a deeper and longer property downturn and weakening global demand,” China economist Tao Wang said in a research report.

“China’s economic growth has decelerated since April as the property downturn deepened. The government’s policy support has arguably been less than was indicated earlier in the year, and less than we expected.”

China has tried to shore up support, with the PBOC cutting both LPR rates in June for the first time since August 2022. That was when the economy was being hit by renewed Covid lockdowns and a deepening property downturn.

But after achieving a solid start at the beginning of the year, the economic picture has darkened. A slowdown was recorded across various parts of the economy in July and pressure has worsened in the vast real estate market.

Last week, official data showed consumer spending, factory production and investment in fixed assets had all slowed further in July from a year ago. Meanwhile, Chinese exports that month suffered their biggest drop in more than three years.

Chinese markets were also weighed down last week by “rising concerns related to the housing market and its contagion to the financial economy,” Goldman Sachs analysts noted in a Saturday research report.

Investors have been worried about the multibillion-dollar debt load of one of China’s top property developers, Country Garden. Lately, the company has missed some payments and suspended trading of onshore bonds, contributing to fears of a default.

Last week, Evergrande, another troubled Chinese developer, filed for bankruptcy in the United States, adding to jitters about a broader crisis. This means it will be even harder for policymakers to forge a turnaround.

“Reviving demand would take much larger rate cuts, or regulatory measures to effectively restore confidence in the housing market,” Capital Economics said Monday.

“The big picture is that the PBOC’s approach to monetary policy is of limited use in the current environment and won’t be enough, on its own at least, to put a floor beneath growth.”

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Business

What Difference Will You Make to an Employer?

Published

11 hours ago

October 21, 2024

Nick Kossovan

It’s common knowledge that companies don’t hire the most qualified candidates. Employers hire the person they believe will deliver the best value in exchange for their payroll cost.

Since most job seekers know the above, I’m surprised that so few mention their Employee Value Proposition (EVP). Most job seekers list their education, skills, and experience without substantiating them and expect employers to determine whether they can benefit their company; hence, most resumes and LinkedIn profiles are just a list of opinions—borderline platitudes—that are meaningless and, therefore, have no value. Job seekers need to better explain, along with providing evidence, how they’ll contribute to an employer’s success.

Employers don’t hire opinions (read: talk is cheap); they hire results.

You’re not offering anything tangible when you claim:

I’m a great communicator.
I’m detail oriented.
I’m a team player.

Tangible:

“At Global Dynamics, I held quarterly town hall meetings with my 22 sales reps, highlighting our accomplishments, identifying opportunity areas, and recognizing outstanding performers.”
“For eight years, I managed Vandelay Industries IT department, overseeing a staff of 18 and a 12-million-dollar budget while coordinating cross-specialty projects. My strong attention to detail is why I never exceeded budget.”
“While working at Cyberdyne Systems, I was part of the customer service team, consisting of nine of us, striving to improve our response time. Through collaboration and sharing of best practices, we reduced our average response time from 48 to 12 business hours, resulting in a 35% improvement in customer feedback ratings.”

These examples of tangible answers provide employers with what they most want to hear from candidates but rarely do; what value the candidate will bring to the company. Typically, job seekers present their skills, experience, and unsubstantiated opinions and expect recruiters and employers to figure out their value, which is a lazy practice.

Getting hired isn’t based on “I have an MBA in Marketing and Sales,” “I’ve been a web designer for over 15 years,” “I’m young, beautiful and energetic,” blah, blah, blah. Likewise, being rejected isn’t based on “I’m overqualified,” “I’m too old,” “I don’t have enough education,” blah, blah, blah. Getting hired depends entirely on showing employers that you can add value and substance to their company; that you’ll serve a purpose.

When you articulate a solid value offer, the “blah, blah, blah” doesn’t matter. Job seekers focus too much on the “blah, blah, blah,” and when not hired, they say, “It’s not me, it’s…” The biggest mistake I see job seekers make is focusing on the “blah, blah, blah”—their experience and education—believing this is what interests employers. Hiring managers are more interested in whether you can solve the problems the position exists to solve than in your education and experience.

Not impressive: Education

Impressive: A track record of achieving tangible results.

You aren’t who you say you are; you are what you do.

If you want to be somebody who works hard, you have to actually work hard. If you want to be somebody who goes to the gym, you actually have to go to the gym. If you want to be a good friend, spouse, or colleague, you have to actually be a good friend, spouse, or colleague. Actions build reputations, not words.

The biggest challenge job seekers face today is differentiating themselves. To stand out and be memorable, don’t be like most job seekers, someone who’s all talk and no action. Any recruiter or hiring manager will tell you that the job market is heavily populated with job seekers who talk themselves up, talk a “good game” about everything they can “supposedly” do, drop names, etc., but have nothing to show for it.

More than ever, employers want to hear candidates offer a value proposition summarizing what value they bring. If you’re looking for a low-hanging fruit method to differentiate yourself, do what job seekers hardly ever do and make a hard-to-ignore value proposition.

Increase sales: “Based on my experience managing Regina and Saskatoon for PharmaKorp, I’m confident that I can increase BioGen’s sales by no less than 25% in Winnipeg and the surrounding area by the end of 2025.”
Reduce cost: “During my 12 years as Taco Town’s head of purchasing, I renegotiated contracts with key suppliers, resulting in 15% cost savings, saving the company over $450,000 annually. I know I can do the same for The Pasta House.”
Increase customer satisfaction:“During my time at Globex Corporation, I established a systematic feedback mechanism that enabled customers to share their experiences. This led to targeted improvements, increasing our Net Promoter Score by 15 points. I can increase Dunder Mifflin’s net promoter score.”
Save time: “As Zap Delivery’s dispatcher, I implemented advanced routing software that analyzed traffic patterns, reducing average delivery times by 20%. My implementation of this software at Froggy’s Delivery can reduce your delivery times by at least 20%, if not more.”

If you want to achieve job search success as soon as possible, structure your job search with a single thread that’s evident and consistent throughout your résumé, LinkedIn profile, cover letters and especially during interviews; clearly convey what difference you’ll make to the employer.

_____________________________________________________________________

Nick Kossovan, a well-seasoned veteran of the corporate landscape, offers “unsweetened” job search advice. You can send Nick your questions to artoffindingwork@gmail.com.

Business

Netflix’s subscriber growth slows as gains from password-sharing crackdown subside

Published

4 days ago

October 17, 2024

Anne Joseph

Netflix on Thursday reported that its subscriber growth slowed dramatically during the summer, a sign the huge gains from the video-streaming service’s crackdown on freeloading viewers is tapering off.

The 5.1 million subscribers that Netflix added during the July-September period represented a 42% decline from the total gained during the same time last year. Even so, the company’s revenue and profit rose at a faster pace than analysts had projected, according to FactSet Research.

Netflix ended September with 282.7 million worldwide subscribers — far more than any other streaming service.

The Los Gatos, California, company earned $2.36 billion, or $5.40 per share, a 41% increase from the same time last year. Revenue climbed 15% from a year ago to $9.82 billion. Netflix management predicted the company’s revenue will rise at the same 15% year-over-year pace during the October-December period, slightly than better than analysts have been expecting.

The strong financial performance in the past quarter coupled with the upbeat forecast eclipsed any worries about slowing subscriber growth. Netflix’s stock price surged nearly 4% in extended trading after the numbers came out, building upon a more than 40% increase in the company’s shares so far this year.

The past quarter’s subscriber gains were the lowest posted in any three-month period since the beginning of last year. That drop-off indicates Netflix is shifting to a new phase after reaping the benefits from a ban on the once-rampant practice of sharing account passwords that enabled an estimated 100 million people watch its popular service without paying for it.

The crackdown, triggered by a rare loss of subscribers coming out of the pandemic in 2022, helped Netflix add 57 million subscribers from June 2022 through this June — an average of more than 7 million per quarter, while many of its industry rivals have been struggling as households curbed their discretionary spending.

Netflix’s gains also were propelled by a low-priced version of its service that included commercials for the first time in its history. The company still is only getting a small fraction of its revenue from the 2-year-old advertising push, but Netflix is intensifying its focus on that segment of its business to help boost its profits.

In a letter to shareholder, Netflix reiterated previous cautionary notes about its expansion into advertising, though the low-priced option including commercials has become its fastest growing segment.

“We have much more work to do improving our offering for advertisers, which will be a priority over the next few years,” Netflix management wrote in the letter.

As part of its evolution, Netflix has been increasingly supplementing its lineup of scripted TV series and movies with live programming, such as a Labor Day spectacle featuring renowned glutton Joey Chestnut setting a world record for gorging on hot dogs in a showdown with his longtime nemesis Takeru Kobayashi.

Netflix will be trying to attract more viewer during the current quarter with a Nov. 15 fight pitting former heavyweight champion Mike Tyson against Jake Paul, a YouTube sensation turned boxer, and two National Football League games on Christmas Day.

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Business

All Magic Spells (TM) : Top Converting Magic Spell eCommerce Store

Published

4 days ago

October 17, 2024

Sven Eggers

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