Treasury Today Asia March/April 2020

Published: Mar 2020



Black swans

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.

At the time of writing, the term is being applied by some to the outbreak of a novel coronavirus, Covid-19, that started in the Chinese city of Wuhan but has already had widespread consequences for people and businesses around the world. Tens of thousands of people have been infected by the disease, while millions have been subject to lockdowns in China. Our thoughts are with everyone affected by the outbreak.

Treasurers across the region will be keeping a close eye on these unfolding events. While the outbreak only began a matter of weeks ago, the economic impact is already being felt, with countries across the region downgrading their economic growth forecasts. Supply chains are being disrupted, with factory closures in China affecting companies around the world, while sectors ranging from travel to luxury goods are seeing a considerable impact. Where workforce matters are concerned, many businesses are also taking steps to minimise travel for their staff.

As they navigate these uncharted waters, treasurers will be working to understand the impact of the outbreak on their own organisations, from supply chain interruptions to the implications for FX risk, liquidity management and cash flow. At the same time, they will of course continue to focus on their existing challenges and responsibilities.

This issue, we take a close look at some of the areas that fall within the treasurer’s remit, from managing bank relationships to mitigating operational risk. We also explore the treasurer’s role in managing the company’s capital structure, and how this activity may be affected by ongoing market conditions.

Delving into the challenges faced by commodities businesses, Nitin Jain, Head of Treasury and Capital Markets at Agrocorp, explains how the company developed a distributed ledger technology platform to unlock supply chain value and support thousands of farmers in Canada and Australia.

Last but not least, this issue’s Insight & Analysis article takes a wide-ranging look at the broader challenges that treasurers face in Asia’s diverse markets, and what they can do to overcome the obstacles and operate as efficiently as possible across the region. In this challenging time, actions like streamlining processes, managing risks effectively and maintaining strong bank relationships will be more essential than ever. Treasury Today Group will be bringing the APAC treasury community together via our webinars, events and content throughout the year.

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