Headcount cut show in financial industry starts

Today two obtrusive numbers come onto headlines of many financial publications: the Royal Bank of Scotland is going to layoff 7,000 its staff, and UPS will put that figure to 8,000. The horrible scene of job loss in financial market now begins to full-fledge. The big names in the industry will be hit the hardest first.

 

More than 40,000 job loss in City

Cut in RBS accounts for one fourth of the bank’s total 28,000 employees, as a formal consultation for position redundancies is already undergoing in the bank. In the beginning of the year, JP Morgan’s London arm expected that there would be as many as 40,000 job cuts for 2008 alone. Many market insiders were mocking at the JP Morgan’s estimate to be over-pessimistic, however, as more and more banks are revealing huge write-downs in their book, the job cut plans are also gaining momentum from bank to bank, people are beginning to paint more gloomy pictures.

 

Business schools reap the windfalls  

Interestingly, many business schools are now busy with putting up commercials and ads in newspaper and websites, in order to attract those who are laid off from financial sector to business schools for MBA or EMBA study. FT revealed in its February business supplement that MBA application cycle actually counters the economic cycle, in other words, the worse of the economy looks like the more people are going to apply for seats in the business schools.

 

MBA VS Recession 

The applicants are hoping that by spending generally two years in business schools, they can fend off the sluggish period of market and economy, and then enter the job market again when the economy pick up pace again. 2008 will be an excellent year to test if this assumption is true or false.

China stock market erupted 9.3% after government stimulus pack

9.3 percent, Shanghai composite index of China erupted on Thursday, achieving its highest single day session gain in six years. Before that, the market plummeted from the peak of 6014 points late last year to less than 3000 points on Tuesday this week.

 

Miracle in the market 

The dramatic scenario happened after the China Security Regulatory Commission, the stock market watch dog of China, and Ministry of Finance announced a plan to slash the stock trading stamp tax from the current level of 0.3% to 0.1%, effective from today. The move had been long anticipated by both investors and market observers, who blamed the market regulators for standing by the excessive market correction since last October.

 

Sentiment in the market was so high today that the trading volume in Shanghai garnered a staggering RMB 195.6 billion yuan (US$ 27.9 billion), almost doubled that of the previous day. Meanwhile, among the overall more than 1400 listed companies, only three saw their stock price dropped. More than 860 stocks topped the 10% daily increase cap set by the market regulators.

 

Can the market boom continue? 

Given the current economic situation in China, such a frenzy increase won’t be sustainable. In order to cool down the potentially overheating economy of China, the government ushered in a series of measures pinpointing at reining in the oversupply of capital in the market. The measures included increasing interest rate and bank deposit reserve ratio, the capital chain of Chinese companies are getting extremely tighter and tighter. 

 

 

 

Global trap for China economy 

Moreover, the overall global economic prospect is still perceived to be gloomy, the recession that is sweeping across the US and European countries will in turn hurt the economies of developing countries, those countries rely heavily on trade with the developed ones. China is one example, a lowering demand for products and services from China is set to affect the listed companies’ revenue in 2008, which in turn will lessen the earnings per stock and result in a less-than-expected increase rate for the company.