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A-shares

Brokers turn poetic as plummeting turnover slashes pay

Small, late bonuses evoke ‘endless tears’ from ‘emaciated’ brokers who see flow of money into ‘shallow pockets’ plummet following boom year of 2015

PUBLISHED : Sunday, 08 January, 2017, 7:05pm
UPDATED : Sunday, 08 January, 2017, 10:02pm

China’s stockbrokers have inventive ways to ask for a bonuses from their bosses as they feel the pinch after the A-share market turnover shrank 50 per cent last year, one of the worst declines across the globe.

Average daily turnover for Shanghai and Shenzhen markets shrank sharply to 519 billion yuan last year from 1.04 trillion yuan in 2015, according to Wind data.

The benchmark Shanghai Composite Index also dropped more than 12 per cent for the year to close at 3,103.64, one of the worst losers among world’s major stock indices. Market cap for Shanghai and Shenzhen evaporated 2.3 trillion yuan to stand at 51 trillion yuan at the end of last year.

As turnover shrank, stock brokers’ paycheques were also affected.

“Brokerage firms had a worse year in 2016, ” said Shao Shuai, an analyst for Capital Securities. “The key is they had a high comparison base in 2015, especially in brokerage business.”

As the A-share market boomed in the first half of 2015 and a record number of investors opened new trading accounts, average annual salary and bonuses for employees in listed securities firms jumped to 750,000 yuan in 2015, one of the highest among A-share companies.

“Don’t expect much bonus for brokers in 2016,” said a wealth management consultant from China Merchant Securities, who asked not to be named. “Brokers’ commissions are directly linked to market turnover. But stocks had a miserable 2016.”

“In China, the securities industry lives at the mercy of the ‘climate’, which means its profitability relies heavily on the market conditions, ” he added.

Hard landing: China brokerages look to cut bonuses, staff as markets snooze

According to the financial results for the first half, most securities firms have already slashed employees’ paycheques as their brokerage business declined sharply.

China Merchants Securities (CMS) paid 1.16 billion yuan to employees in the first half, down 75 per cent from 4.67 billion the same period in the previous year, according to the company’s interim results.

CMS cited “sharp declines in transaction volumes and margin loans” in the A-share market and said its brokerage business and investment operations suffered particularly.

Southwest Securities also cut staff pay 62 per cent to 727 million yuan in the same period. Orient Securities reduced pay 61 per cent to 826 million yuan.

China International Capital Corp paid its employees 46 per cent less at 1.15 billion in the first half, attributing the drop mainly to “economic and stock-market gloom” in its interim results.

Securities firms even delayed payment of employee bonuses from 2015, prompting many staff brokers to seek tactful ways to ask for the money.

Some have adapted ancient Chinese poems or written Limericks on the popular anonymous social sharing app Wumii.

“Working hard, I’m getting more and more emaciated, but with a shallow pocket. After dreaming 10 years in investment banks, I awake, only to find ‘a poor financial labourer’ tied to my name,” a Wumii account holder who branded himself as a staff member in CMS said in a post earlier this year. The Limerick was an adapted version of a famous piece by ancient Chinese poet Du Mu.

“... Endless tears coursing down, I only hope to get the bonus and fill my pocket before holidays come ...” according to another Limerick posted earlier this year by a verified Wumii account holder from CMS.

Separately, an anonymous employee from Guosen Securities shared screenshots of his bank balance, which showed he only received a salary of 1,353 yuan in May last year from Guosen Securities, in contrast with broker commissions of nearly 60,000 yuan in July 2015, according to Cao Lei, a commentator who forwarded the screenshots on his verified account on messaging app WeChat.

“After the expansion in 2015, many securities firms have begun downsizing or cutting staff pay in anticipation of an upcoming struggle in an industry downturn,” Cao said.

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