Chinese Brokerage Analysts Once Paid Millions Now Face Job Cuts Amid Industry Retrenchment

In a significant shift from the recent past, brokerage analysts in China are facing job cuts and pay reductions as the industry undergoes a period of retrenchment following years of growth.

What Happened: A number of senior analysts at the state-owned Guotai Junan Securities Co. have recently resigned due to pay cuts and stricter performance metrics. Additionally, a Shenzhen-based brokerage reportedly laid off 40% of its analysts in Q1 and cut their 2023 bonuses by over 50%. Other firms are cutting back on meal and travel budgets to reduce costs.

The cutbacks are occurring against a backdrop of a prolonged market slump that is reducing trading commissions and tighter regulatory limits on what research analysts can publish, Bloomberg reported on Thursday. This is a stark contrast to a few years ago when securities firms were aggressively hiring and offering compensation of 10 million yuan ($1.4 million) or more to star analysts.

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"Now with the trading fees cut, the bubble in the research circle will also burst," said Sun Jianbo, a former chief strategist at China Galaxy Securities Co. who now runs China Vision Capital, an asset manager in Beijing.

Why It Matters: The retrenchment in China’s brokerage industry comes at a time when the country’s economy is grappling with a host of challenges. Despite faster-than-expected economic growth, Chinese exporters are confronting a complex array of challenges that could impact global trade dynamics.

Moreover, while China’s economy is expected to expand by 5.3% this year, bolstered by the stabilizing property sector and improving external demand, the country’s largest bank has pledged to provide financing for 300 billion yuan ($41 billion) to revive the country's tourism sector.

Read Next: ‘97% Of All Illicit Fentanyl That Arrives In The US Comes From China’: Democratic Congressman Sounds Alar

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