Treasury Today Asia January/February 2020

Published: Jan 2020



Treasury in the Year of the Rat

As we begin a new year, many corporate treasurers will be pleased to see the back of 2019 – particularly those operating in the Asia Pacific (APAC) region.

It goes without saying that 2019 was a year full of uncertainty. From the continuing trade war between the US and China, to violent protests in Hong Kong and fresh conflict in the Middle East – not to mention concerns surrounding Brexit and a new UK government, it’s hoped that many of these issues will be resolved this year.

With that in mind, 2020 is the Chinese ‘Year of the Rat’. As the first in the Chinese zodiac, the Year of the Rat traditionally signals new beginnings. Regardless of the geopolitical landscape, and looking ahead to the coming year, corporate treasurers across the APAC region will be weighing up a whole host of new challenges, trends and opportunities. Many will include inefficiencies arising from legacy structures, risks in the current macroeconomic market and opportunities brought by new technology. With this in mind, what will treasurers be focusing on in the year ahead?

Trade finance may not traditionally have been regarded as a hotbed of innovation. But while some digitisation initiatives have failed to gain critical mass, recent months have seen considerable focus on the potential application of blockchain and distributed ledger technology in this area. How much progress has been made so far – and what could the future hold for trade finance?

We then look towards the latest trends in cross-border payments and correspondent banking. Whilst most treasurers will be interested more in the timeliness and cost of their payments, rather than how the bank executes them, if correspondent banking is showing its age, it may be time to explore other options – and that may mean stepping beyond the banking realm.

But with corporate social responsibility (CSR) high up on many companies’ radars, investment in green bonds continues to flourish, year after year. Last year for example, global green bond issuance topped US$200bn. However, demand for green bonds far exceeds supply, with many issuers being oversubscribed the moment a green bond is launched.

Although ‘being seen to be green’ is imperative for investors and stakeholders alike, just what is holding green bonds back from reaching their full potential? And finally, in our ‘Back to Basics’ feature, we examine the complex subject of how to manage commodities risk, assessing the current crop of tools available to treasurers.

One thing is certain, as we leave the volatility of 2019 behind and move into the New Year, treasurers simply have to remain alert. It seems that the ancient Chinese proverb ‘solve one problem and you keep a hundred others away’ could not be more apt.

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