China’s parliament, the National People’s Congress, will begin its annual session on Tuesday. While largely ceremonial, the occasion will be closely watched by investors for signals regarding the ruling Chinese Communist party’s plans. These plans aim to bolster the country’s uneven post-pandemic economic recovery amid increasing deflationary pressures, a property crisis, subdued markets and mounting local government debt.
The NPC has little autonomy and is often characterised as a “rubber stamp” body. It has never in its history rejected a bill or personnel decision proposed by the CCP. Beijing uses it to pass laws, announce personnel changes and endorse its policies. Held every year, the so-called “Two Sessions” meetings, which involve the NPC and the country’s top advisory body, the Chinese People’s Political Consultative Conference, will last for one to two weeks.
The meeting will open with Premier Li Quang’s “work report”, an annual speech outlining economic targets on gross domestic product growth and the fiscal deficit, which also provides insights into the plans made to achieve these goals.
Most analysts are expecting China to set a gross domestic product target of around 5 per cent for 2024 and a budget deficit of 3 per cent of GDP. Analysts are also anticipating the announcement of moderate stimulus plans to stabilise growth, but expect these measures to fall short of the bold structural reforms they say are needed to fix deep structural imbalances within the country’s economy.
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Santander is on the brink of a potential shareholder rebellion at its upcoming annual general meeting this month, triggered by proxy adviser ISS recommending that investors vote against executive chair Ana Botín’s proposed pay package.
Botín was awarded a pay package of €12.2mn last year, a fixed pay increase of around 3 per cent from 2022, as Santander posted record annual profits of €11.1bn on the back of higher interest rates. This makes her one of Europe’s top-paid banking executives.
As reported by the Financial Times, Santander has proposed amendments to its pay policy, including a 5 per cent raise for both Botín and CEO Héctor Grisi. The ISS sent shareholders a report on Friday, seen by the FT, recommending they vote against the pay proposals over concerns about the correlation between pay and performance.
The report said Santander’s board is trying to justify the pay rise by pointing to the bank’s 40 per cent shareholder return last year and a need to stay competitive with rivals. However, the ISS concluded that: “The [current] chair remuneration package seems far from being uncompetitive, and the proposed increase is likely to exacerbate recurring pay-for-performance concerns.” It said that for this reason, “support for the new policy is not justified”.
While the ISS’s concerns relate to fixed pay, Botín, along with several other European executives, has previously voiced opposition to the European cap on banker bonuses.
They argue that it puts them at a disadvantage compared to global rivals, particularly after the UK lifted its own cap. Speaking at a FT conference last November, Botín argued the importance of abolishing the cap, saying that such a move would better align the interests of bankers and their shareholders.
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Japan’s Nikkei 225 index reached fresh highs this morning, surging beyond 40,000 points for the first time. The milestone comes just days after the stock market set a record high of 39,098.68 points, surpassing its previous 1989 peak.
The Nikkei index has experienced a robust upward trend for over a year, driven by a combination of strong corporate earnings, a weaker yen that has benefited exporters, and a flood of foreign investors seeking alternatives to China’s subdued markets. According to Reuters, some analysts additionally see the ongoing rally as a potential turning point for domestic retail investors in Japan, who have typically shown indifference toward the country’s stocks.
“We expect Japan to be one of the top-performing markets between 2023 and 2030,” said Jefferies analysts in a research report on Sunday. “The great shareholder return story in Japan has begun.”
While Japan’s stock market continues to post gains, its broader economy has not fared as well. Last month, Japan’s economy officially slipped into a recession, relinquishing its position as the world’s third-largest economy to Germany.
Read more: Is the Nikkei index stock record a turning point for corporate Japan?
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Switzerland’s central bank has posted a loss of SFr3.2bn ($3.62bn) for 2023. The Swiss National Bank is among the latest European central banks to announce losses as higher interest rates, imposed to fight inflation, forced them to pay billions to commercial lenders. The German central bank last month said it lost €21.6bn last year, depleting almost all of its provisions, while its Dutch counterpart lost €3.5bn.
The SNB’s stringent monetary policy has, however, paid off in terms of easing inflation in Switzerland, which remains significantly lower than in neighbouring countries. The latest figures released today indicate that Swiss inflation was 1.2 per cent in February, its slowest pace in almost two-and-a-half years.
