MARCHASIA BUSINESS OUTLOOK8NEWSROOMMajor Japanese companies are expected to formally propose substantial pay increases during annual wage talks with unions that conclude on March 13. Economists predict an average rise of around 3.9 percent in annual pay for union workers at large firms, marking the most significant increase in 31 years. This development is likely to reinforce the case for the Bank of Japan (BOJ) to phase out its unprecedented monetary easing, with expectations of ending negative interest rates by April.The BOJ has consistently emphasized the importance of robust wage growth as a prerequisite for rolling back more than a decade of radical monetary policies aimed at combating deflation and economic stagnation. The annual "shunto" negotiations, a traditional aspect of Japanese business, have gained renewed significance as Prime Minister Fumio Kishida prioritizes pay increases to address years of meager wage growth compared to the OECD average.Wage negotiations, previously overshadowed by efforts to reduce debt, excess workers, and redundant assets after the asset bubble burst in the early 1990s, have returned to the forefront. The current labor shortage in Japan has underscored the need for companies to raise pay to attract talent, with the expectation that big firms will offer wage hikes close to 4percent, potentially leading to the BOJ ending negative interest rates in April.While the wage talks directly impact a small segment of the workforce at major firms, such as Toyota Motor, they set a precedent for the broader economy. Wage increases are becoming increasingly crucial to attract workers in Japan, particularly as the country grapples with higher prices, marking a departure from the past three decades when prices remained relatively stable. On Thursday, Singapore Telecommunications revealed the sale of a 0.8percent stake in India's Bharti Airtel for S$950 million (approximately $711 million) to U.S. investment firm GQG Partners. This move is part of Southeast Asia's largest telecom operator's ongoing capital recycling efforts, totaling S$8 billion since its strategic reset in 2021."SingTel, through its unit Pastel, divested 49 million shares, equivalent to 0.8percent of Airtel's outstanding shares, thereby reducing its stake by the same percentage. Following the transaction, SingTel will retain an effective 29percent stake in Airtel, valued at around S$33 billion. The telecom company has been gradually selling Airtel shares, including a direct 3.3percent stake sale for S$2.54 billion in 2022.The anticipated gain from this recent stake sale is expected to be S$700 million, though specifics on the divestment price were not disclosed. SingTel has prioritized enhancing shareholder returns, exemplified by raising dividends to 70-90percent of underlying net profit in November 2023.Analyst Sachin Mittal from DBS praised the timing of the move, considering Airtel's share price surge of 56percent in the past year. He emphasized that SingTel's market cap is S$39 billion, while its Airtel stake alone is valued at S$33 billion, indicating an undervaluation of SingTel's stock price by over 45percent.Arthur Lang, SingTel's finance chief, highlighted that the current share price does not reflect the intrinsic value or growth potential of the group. As of now, SingTel shares are trading 0.4percent higher at S$2.35, and Airtel shares are up 1.1percent at 1,207.4 rupees per share. Airtel and GQG Partners have not responded to Reuters' request for comments. JAPANESE COMPANIES' HIKE PROPOSITION HIGHEST IN 31 YEARSSINGTEL SELLS 0.8PERCENT OF STAKE IN AIRTEL TO GQG PARTNERS
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