Treasury Insights sits down with Group Treasurer, Chris Emslie to find out how General Mills navigates Asia’s complex short-term investment landscape.
Could you give me an overview of your role and your team in Asia?
The treasury department at General Mills in Asia is quite new. I’ve been involved for six months and I’m building up the treasury team – I’ve got people in India and China at the moment, but in Singapore it’s just me. We’re currently focusing on cash management and putting the policies in. I previously spent ten years with ABB running treasury first in Africa and then in Asia, here in Singapore.
What is your strategy in the area of short-term investments?
We didn’t have a strategy up to six months ago – our strategy was pretty much to keep the money in the bank, although we were using money market accounts in China and Hong Kong for any overflow of liquidity.
Working with the treasury departments in Europe, we’ve now put a new policy in place – we’ve changed our investment focus to try and get a return on investment and have a more structured approach to what we do with our excess cash. We’re an American company, so a lot of our cash now goes back to the United States, but any excess cash is now going into an investment portfolio and we’re looking for the best returns now.
I’ve spent a bit of time with the banks trying to understand how the landscape is changing and where we can get the best return, considering that interest rates in the region are so low. It’s not like it used to be ten or 15 years ago when you could earn a really good rate of return, but you still want to be in a favourable growth position and get something back.
How is the short-term investment landscape in Asia Pacific changing?
The short-term investment landscape is definitely changing – there are far more opportunities for good investments and the banks are starting to make far better offers and have new product offerings in the region. In particular, we’re starting to see more products come to market in Hong Kong and China – we have a lot of excess cash sitting in China at the moment, so that’s given us opportunities to invest there.
Are you facing any particular challenges where short-term investments are concerned?
Yes – I think the biggest issue at the moment is regulation. In Asia there’s always the worry that you will go through various stages and outline a plan, and then six months down the line the regulations will change. But I think it’s become far more stable recently. Everything else is pretty straightforward.
How often do you plan to review your short-term investment policy?
We have just updated our investment policy – the policy we had was about ten years old, so we’ve totally rewritten it to take in as much of the newer landscape and the newer regulations as possible. We will continue to update it every three to six months as the landscape changes. The goal will be to update the policy when regulatory changes take place and make sure that it remains relevant, rather than necessarily aiming for broad strategy changes.
Are factors such as Basel III and in-country regulatory change prompting you to adjust your short-term investment policy and goals? If so, how?
Yes, there has been a lot of conversation around the changes and the impact to our strategy – it’s just made us more proactive and made us have a vested interest in our strategy as the changes come into play, both from a regulatory and an in-country perspective – especially in markets where we have liquid cash that can be utilised.