NAB slashes dividend, executive pay cuts at GM Holden, China’s exports slump: Economy roundup

Australian investors have had a nervous morning following the shock news that the unemployment rate has jumped to 5.2%.

 

The Australian sharemarket opened 0.7% higher today after Wall Street posted slight gains overnight, but has since lost ground on the release of jobs data from the Bureau of Statistics.

 

The benchmark S&P/ASX200 index was up 2.3 points or 0.07% to 3246.7 at noon AESDT. The Australian dollar has also gained to US65 cents.

 

Commonwealth Bank shares have dropped 1.5% to $28.18, while Westpac has also lost 1.1% to $16.68. ANZ also fell 1.9% to $12.90, as Wesfarmer shares gained 1.1% to $17.53.

 

NAB shares have gained 4.1% to $16.97 on news the bank will cut its dividend by 25% as it focuses on building Australian franchise and international acquisitions.

 

“As part of maintaining conservative setting, and reflecting the increasingly challenging external environment, dividends will be reduced by approximately 25% for the 2009 year,” the bank said.

 

While the bank says it is positioned to survive the downturn, it also announced new board positions with Mark Joined as executive director and John Cooper designated executive director UK.

 

Chinese exports shrink

 

Investors would have also been worried by news from China. The country’s exports dropped 25.7% over the last 12 months, well above the 5% fall forecast. Imports also dropped 24.1%.

 

“China has finally and spectacularly succumbed to the world financial crisis on the export side, and it’s difficult to see why that would improve in the short term,” Paul Cavey, an economist at Macquarie Securities in Hong Kong, told Reuters.

 

Holden freezes pay

 

The trouble felt by automakers in the United States has now hit home, with GM Holden announcing it will cut and freeze pay packets for its workers as it deals with “some of the worst market conditions in living memory”.

 

Managing director Mark Reuss said in a company email that the group will cut salaries by 10%, while no bonus payments will be made to executives this year.

 

“To survive in this unprecedented environment, we need to make some rapid changes to cut costs in the short term,” he said.

 

“The Holden leadership team has elected to maintain salaries at current levels for award-free salaried staff up to GM Grade 7. This replaces any merit assessment for the past year or other annual review while avoiding pay reductions.

 

“I am well aware that today’s news is profound and adds a very personal dimension to the challenges we are facing. But while these are difficult times, I am pleased that at this stage we have been able to quarantine the pain to the most senior, and best remunerated, ranks of the company.”

 

Wall Street up

 

Overseas, Wall Street posted minimal gains as JP Morgan said the group remains profitable. The Dow Jones Industrial Average finished up 3.91 points or 0.06% to 6930.4. Oil prices plummeted 7% to $US42 a barrel.

 

US President Barack Obama has said that next weekend’s meeting of the Group of 20 finance ministers will see the US request other countries to use stimulus measures while pursuing aggressive financial regulatory reform.

 

“We’ve got two goals in the G20. The first is to make sure that there is concerted action around the globe to jump start the economy. The second goal is to make sure that we are moving forward on a regulatory reform agenda,” Obama said. “The G20 comprises major developed and emerging economies.

 

“We’re moving forward in stabilising the financial system through a whole host of steps that have already been taken, and a number of steps that we intend to take in the future to make sure that the financial system is solvent, that our banks are strong.”

 

NZ rate cut

 

Closer to home, the Reserve Bank of New Zealand has once again cut interest rates by 50 basis points, bringing the official cash rate to a record low of 3%. The bank says the economy is expected to slowly recover over the course of the year.

 

“As economic activity troughs, we expect rapid easing of monetary policy to slow,” RBNZ Governor Alan Bollard said.

 

 

Trending

COMMENTS

Subscribe
Notify of
guest
0 Comments
Inline Feedbacks
View all comments