As 2020 draws to a close this seems an apt moment to reflect on a most extraordinary year for all of us. The Asia-Pacific region, although the first hit by the pandemic, has been spared the lockdown measures that have occurred in much of Europe, North and South America.
“When the winds of change blow, some people build walls and others build windmills,” so the Chinese proverb goes. As the world continues to change, businesses that adapt to take advantage of the new environment will be the ones that will gain the most.
Five months into 2020, the world continues to face a crisis no one could have foreseen. Since the last issue of Treasury Today Asia, the epicentre of the COVID-19 pandemic has moved from China to Europe, and then to the United States, with millions of people and businesses affected. While the Wuhan lockdown has been lifted, and several countries in Asia Pacific are beginning to focus on rebooting their economies, considerable challenges lie ahead.
Coined by Nassim Nicholas Taleb in his 2008 book, The Black Swan: The Impact of the Highly Improbable, the term ‘black swan’ is understood to describe an event that is unexpected; that brings major consequences; and that later comes to be rationalised as something that could have been predicted. It has been applied to various events, such as the dotcom crash of 2000, the 2008 global financial crisis, and the 2011 Fukushima nuclear disaster.
India. One of the fastest-growing economies in the world.
Four years ago, the Indian government made a decision that would change the lives for its 1.3 billion citizens forever. In making digital services available for all, the Indian government has not only improved the country’s online infrastructure, it has increased internet connectivity and widened opportunities for business.
When a business grows and reaches into a different region, setting up a regional treasury centre may be seen as a logical next step. After all, having somewhere closer to the action that can support business growth, cover the local footprint, and have treasury experts on tap, should be appealing. And what about the favourable tax regimes established by key locations; surely a major benefit?
The payments revolution is a truly global affair yet, at the regional level, Asia undoubtedly stands at the forefront of payments innovation. Driven by e-commerce, it is a position that requires close management if it is to deliver on expectations.
“The Asian Century” will be about much more than just China
Evidence continues to mount that China’s economy is faltering, though it is uncertain as yet how serious its retreat will turn out to be. With hindsight, it was surely unrealistic to expect that after two decades of stunning growth that has propelled it to the second largest economy in the world, China could continue to grow three times faster than advanced nations.
APAC 2019: US-China trade war a big risk factor for treasurers
As it stands, the year ahead is shaped to be rather interesting, if not challenging, for treasurers across Asia Pacific, with politics a key theme as elections will take place in India, Indonesia, the Philippines and Australia.
Global economy under threat as politicians lose the plot
Corporate treasurers are no strangers to managing risks to financial and liquidity management but with fears growing that the global economy is heading for another downturn, they are coming under pressure to monitor an increasingly wide array of threats.
The internet is slowly becoming a crypto-graveyard. This is after cryptocurrency after cryptocurrency, often created as part of an initial coin offering (ICO), lose their value, rendering them worthless. In fact, one website which tracks failing cryptocurrencies claims that there are over 800 cryptocurrencies that trade for less than a cent.
Treasurers have never had so many banks competing for their business. Indeed, a recent Bain & Company report has found that the transaction banking space is more saturated than ever. This comes as bank executives place their bets on the fee-based income gleaned from the business driving a new era of growth for their institutions.
Alibaba founder, Jack Ma, is renowned for his colourful quotes on all manner of topics. One that stands out is his comment on flying pigs. “First of all, a pig can fly in the wind, but when that wind dies down it’s the pig who’s going to fall to his death, because he’s still a pig,” said Ma in a 2015 interview with Sina Tech.
Countries across the region celebrated the Lunar New Year in February, ushering in the Year of the Earth Dog. According to the Chinese Zodiac, the Earth Dog is kind, efficient and skilled in communication. It holds the notion of fair play and social justice dear and, given the dog’s role as a protector of the home, could be interpreted as time for a shift geographically and politically from predominantly offensive positions to more defensive positions.
Singapore is taking digitisation seriously. This was evident at its recent fintech festival, which saw over 25,000 attendees from all over the world descend on the city-state to take part in a week of festivities designed to push forward the future of financial services.
All eyes were on Beijing in October as the 19th Communist Party Congress took place. Staged in the Great Hall of the People every five years, the congress brought together over 2,000 party members to shape policy, decide on political positioning and set the agenda for the years ahead.
There is a peculiar irony in the way that, as one side of the world seeks to close its doors and adopt an isolationist stance (cf. Brexit and Trumpism), another celebrates openness and welcomes a co-operative future.
In July 1997, the United Kingdom transferred sovereignty over Hong Kong to the People’s Republic of China after 150 years of British control. The event marked a new era for Hong Kong and the effective end of the British Empire. In his farewell speech, Governor Chris Patten said: “The story of this great city is about the years before this night and the years of success that will surely follow it.”
The ‘One belt, one road’ initiative has been widely spoken of since it was first unveiled by President Xi Jinping in 2013. As part of the government’s drive to transform its economy from one based on manufacturing to one based on services, the ambitious initiative aims to restore the country’s old land and sea trade routes and to boost economic connectivity between Asia, Europe and Africa.
Thirty years ago, whilst deep in the grip of the Cold War, the United States became the head cheerleader for globalisation, a trend driven largely by capitalist enterprise and free trade. Meanwhile China, on the other hand, was busy staunchly adhering to the communist principles of central control. The country’s economy was still largely closed, with Deng Xiaoping’s ambitious financial reforms and economic overhaul just beginning.
Whilst Brexit and the US presidential race have been dominating the headlines for most of the year, Asia has, for the most part, been quietly getting on with business. That isn’t to say that the region hasn’t been facing its own challenges, however.
For corporates in Asia Pacific, bank deposits still remain the number one short-term investment option by some distance. Yet, this is not typical elsewhere in the world. In Europe and the US, for instance, corporate short-term investment portfolios are more balanced between bank deposits and money market funds (MMFs), and then supplemented with a handful of other investment options.
Our Corporate Treasury Benchmarking Studies have been leading the industry since 2009. Thanks to the 3,500 of you who have taken part, we have built up a very clear picture of the key issues and challenges affecting corporate treasury and, importantly, provided some of the KPI metrics against which you have been able to benchmark yourselves.
As our industry moves towards a more diverse and inclusive future, our Women in Treasury initiative becomes ever more important.
On 14th April at the South Beach in Singapore we will host our third Women in Treasury Asia Forum. Designed to discuss gender equality within corporate treasury, we welcome women and men to attend and to continue to develop this discussion around diversity and inclusion on a broader level within this field.
Monday 8th February 2016 will see the world’s most populous country celebrate Chinese New Year and welcome in the Year of the Monkey. People born under this sign of the zodiac are believed to be: smart, quick-witted, frank, optimistic, ambitious and adventurous.
As our November/December issue hits your desks thoughts are turning to the completion of the ASEAN Economic Community (AEC), the deadline for which is set for 31st December. Since its founding in 1967 the Association of Southeast Asian Nations (ASEAN) has aimed to foster economic growth, social progress and cultural development in the region; to promote regional peace and stability and to provide assistance to each other, amongst other aims.
As we head to Singapore for SIBOS 2015, the front pages of the financial press are still dominated by China’s stock market rout and the impact of the country’s decision, on 11th August, to devalue the renminbi by 2%. The statistics paint a sorry picture: since June 2015, China’s equity markets have dropped by almost 40% and China’s foreign currency reserves shrunk by $93.9bn at the end of August – the largest monthly fall ever recorded.
At the time of writing, investors across the globe are watching the Greek debt crisis unfold. Yet China is experiencing a crisis of its own, with the Shanghai and Shenzen Indices having lost almost a third of their value since the highs set on 12th June this year.
All eyes are on the Association of Southeast Asian Nations (ASEAN) as the ten-member bloc continues to work towards the creation of a single market. Designed to allow a free flow of goods, services, and investments, the ASEAN Economic Community (AEC) should also allow companies based in ASEAN to secure better access to raw materials, and to leverage a freer flow of capital and labour. In fact, a report released by the International Labour Organisation (ILO) and the Asian Development Bank last year suggested that the AEC could create 14 million new jobs and see the region’s annual growth rise by 7.1% over the next decade.
As the pivotal holiday in the world’s largest economy and most populous country, Chinese New Year has an increasingly large impact on corporates across the globe. Prompting the most significant mass migration of people on the planet, the Spring Festival leaves factories empty and sends ripples through supply chains the world over. It also leaves the financial markets quiet, not least because the majority of indices in the Asia region shut for at least a day to mark the event.
The ascent of mobile is arguably the greatest innovation that the payments industry has seen in recent memory. Nowhere does the mobile revolution hold more promise than in Asia. After all, the region accounts for over half of the world’s mobile devices. There is also a significant move towards m-commerce in APAC, with over 50% of all Asia-based online transactions in 2015 set to be made by mobile, according to Criteo.
Throughout 2014, there have been a number of major economic, infrastructural and political developments in countries across the Asia-Pacific region. These changes have both challenged treasurers and created opportunities for innovation and efficiency.
In August the Chinese State Administration of Foreign Exchange (SAFE) relaxed the rules surrounding the use of options in the onshore market. The new rules allow domestic corporates to purchase renminbi-based swaps and options – increasing the range of risk management tools at their disposal.
Recognising the best in corporate treasury is a difficult undertaking, yet quality and integrity are vital to the success of the profession.
Over the last six years, Treasury Today’s Adam Smith Awards have gained global recognition as the ultimate industry benchmark for corporate best practice, celebrating exemplary practice and showcasing innovative industry solutions.
The job of the treasurer is never just about numbers. It’s a multi-faceted role that, today more than ever, demands an increasing level of emotional intelligence. Not only must treasurers use their persuasive abilities to help secure budget for technology investment, but they are expected to interface with the C-suite on a regular basis and embrace the culture of the corporation in which they operate, whilst also selecting and retaining the best possible treasury team.
Whilst the treasury profession remains largely male-dominated, there are remarkable women enjoying remarkable careers in the treasury sphere, not least in the Asia Pacific region. At Treasury Today, we believe that it is important to recognise female innovators in the corporate treasury profession, which is why we founded the Women in Treasury (WiT) initiative. It aims to bring female treasury practitioners together to share their experiences, challenges, successes and failures, as an inspiration for all operating in this field.
Our job is to research, analyse and report on what is going on in corporate treasury and finance in Asia and elsewhere in the world. This issue reflects that and is a mix of basic, yet crucial, treasury and cash management content coupled with some specific pieces as well as news of our new initiatives in the region.
India is the main focus of this edition of Treasury Today Asia. 2013 has not been kind to the tenth largest economy by nominal GDP and member of the exclusive BRIC circle. The Federal Reserve’s hint at unwinding quantitative easing (QE) early in the year caused the Indian rupee to fluctuate wildly; it hit an all-time low against the US dollar in August. This issue contains a special report on the causes and consequences of the rupee volatility, including an interview with the treasury team at Larsen & Toubro, a technology, engineering, construction and manufacturing company based in Mumbai.
Sibos is the annual banking conference organised by SWIFT, the bank owned provider of secure financial messaging services. Sibos has become the ‘must-attend’ conference for bankers, technology suppliers and consultants who are involved in all aspects of the transactional banking business. The conference is held in different parts of the world each year and there are 6,000+ attendees most years. What do they all do? Well, there are some serious debates at Sibos and informative conference sessions but it is also a big party as banking friends get together and the booze flows from the stands.
Welcome to the fourth edition of Treasury Today Asia
In this issue, we explore the global approach to supply chain finance (SCF). Different markets approach the issues surrounding settlement differently, with India and China noted as leading regions with the greatest SCF market potential. The rapid growth that many Asian companies are experiencing is driving a need to establish the financial infrastructure to support it.
Welcome to the third edition of Treasury Today Asia
Singapore is our Country Focus in this month’s edition. Singapore has experienced a meteoric rise following its independence from Malaysia in the mid-1960s. The following five decades can be characterised by a steady growth and influx of foreign talent and investment as Singapore has swelled to become one of the world’s most developed countries. As the government pushes for a curb in foreign workforce growth and an increase in productivity, we bring you the latest insight on Singapore’s future and what that means for treasurers in the region.
Welcome to the second edition of Treasury Today Asia
We are excited to announce the launch of the Asia Pacific Regional Award for Best Practice within our Adam Smith Awards in June. Please have a look at the Awards and submit your nominations for this, along with any other categories you feel you quality for. We look forward to receiving your entries.
Welcome to our new publication – Treasury Today Asia
Treasury Today Asia is the new, bi-monthly magazine by the publishers of Treasury Today in response to the many requests we have received to broaden the coverage of Treasury Today in China to include the rest of Asia. The new magazine reflects the trends, challenges and opportunities for treasury/finance professionals in the Asia Pacific region.