Thought for the Month archive

June 2019

Defining cash for Australian investors

The definition of cash, while ostensibly straightforward – banknotes and coins – becomes increasingly challenging when the demands for higher returns counteracts the obligation to ensure adequate liquidity and the commitment to avoid losses.
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May 2019

From risk-off to risk-on

The market mood has changed dramatically over the last six months. The risk-off sentiment that dominated in late 2018 has very much been replaced by a risk-on attitude in 2019, mainly in response to the recent dovish shift in Federal Reserve policy.
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April 2019

Singapore’s MAS: Actions and words

Singapore’s de facto central bank, the Monetary Authority of Singapore (MAS), will hold its semi-annual monetary policy meeting in mid-April. Given the recent rapid changes in the global and regional economic outlook, market consensus for future policy direction remains divergent – but both the MAS’s actions and words could have significant implications for Singapore dollar cash investors.
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March 2019

Cash is back

After a decade of anaemic returns, cash rates moved decisively higher in 2018 – at least in the US. Three-month Treasury yields pushed through the 2% mark, while dollar money market yields actually rose above the yield available from many broader fixed income benchmarks.
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February 2019

What can Chinese money market fund investors expect for 2019?

China is experiencing a broad economic slowdown. GDP growth fell to a 28-year low of 6.4% year on year in the fourth quarter of 2018, as weaker domestic demand combined with escalating trade tensions to weigh on business and consumer sentiment. The strong fiscal and monetary policy response from the Chinese authorities to this slowdown should help to support growth, but will also have a significant impact on cash investment options and cash returns in 2019.
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January 2019

Setting a course for markets in 2019

2018 ended with investors very much in risk-off mode. Markets wilted under pressure from several headwinds, including concerns about trade wars, a US recession, a global slowdown, Brexit, Italian fiscal policy, French fuel protests, leverage in the credit markets and deteriorating market liquidity.
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December 2018

Understanding credit risks in China

Although China’s bond market is the third largest in the world, with USD 9 trillion outstanding, the concept of corporate bond defaults – or indeed downgrades – has until now been alien to the vast majority of local retail and institutional investors. However, with default rates now on the rise, investors increasingly need to understand the credit risks when investing in China, and the ways to mitigate them.
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November 2018

Managing liquidity when interest rates are rising

Rising rate environments can challenge even the most sophisticated fixed income investor. As the Federal Reserve (Fed) rate hiking cycle unfolds and regulatory reform kicks in, investors need to consider the implications for their short-term investments.
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October 2018

Liquidity insights: Q3 in review

In Australia, second-quarter GDP beat expectations – hitting 3.4% y/y – as strong exports and consumption helped offset lower investments. Strong commodities demand helped exports grow at a double-digit level, while the trade balance remained in surplus, supporting a surge in business confidence indicators.
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September 2018

Making sense of your MMF options

New European money market fund (MMF) regulations are opening up the MMF landscape to include some products that could leave unwary investors short on their security or liquidity requirements. Investment decisions may no longer be as obvious as they once were.
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August 2018

Is the Fed on target?

The Federal Reserve’s (the Fed’s) interest on excess reserves (IOER) shot to prominence last month following an unprecedented adjustment by the central bank. What was the rationale for the change and what, if any, are the implications for markets and investors?
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July 2018

Connecting the regulatory dots in China

The Federal Reserve’s (the Fed’s) interest on excess reserves (IOER) shot to prominence last month following an unprecedented adjustment by the central bank. What was the rationale for the change and what, if any, are the implications for markets and investors?
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June 2018

Have you put cash in its place?

The low (or negative) yield environment, coupled with many banks backing away from liquidity products following the introduction of Basel III, is forcing corporate treasurers to sharpen their focus on cash management
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May 2018

Decoding China’s Monetary Policy Machinations

In April the People’s Bank of China (PBoC) continued its hawkish strategy of shadowing Federal Reserve (Fed) Rate hikes, raising rates on two of its quasi-monetary policy tools. However, later the same week, the central bank announced a distinctly dovish reserve requirement ratio (RRR) cut. These apparently conflicting interest rate movements have increased market volatility and intensified uncertainty – especially for liquidity and treasury investors.
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April 2018

Are you ready for regulatory change?

The wide-ranging scope of the upcoming changes to European money market fund (MMF) regulations should be enough to make most investors sit up and take notice. Quite simply, money market fund investors will need to be ready for the change, or risk losing out.
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March 2018

It’s time to think ahead

Under new European Money Market Fund Regulations, the line-up of our liquidity fund range will be changing. However, there will be no changes to the investment profiles of our funds, or to our investment philosophy. Our European Money Market Fund Resource Centre gives a summary of the fund range options we intend to offer in the short-term space for USD, GBP and EUR investors. We continue to evaluate additional structural options and currencies, and will communicate with investors as these evolve.
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February 2018

China’s 2018 economic outlook is upbeat, but cash investors should remain vigilant

China’s recent robust economic growth has confounded cynics, demonstrating that the country could successfully balance the conflicting challenges of ensuring financial stability while decelerating the growth of debt. A combination of a continued global recovery, robust local property markets and improved household consumption all helped the government achieve its 2017 growth target. At the same time, the hawkish monetary policy bias and macro prudential measures from the People’s Bank of China (PBoC) has started to curtail the growth of the shadow banking sector, while also reducing financial risks.
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January 2018

A mixed first-quarter forecast

As 2017 has drawn to a close, we look ahead to what may lie in store for euro and sterling money market fund investors in the first quarter of 2018.
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December 2017

European MMF Regulation: the countdown continues

The countdown to implementation of the European Money Market Fund (MMF) Regulation is well underway, with just over a year left on the clock. As that deadline approaches, we’re as committed as ever to helping our clients get to grips with their choices under the new rules.
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November 2017

China’s countdown to tighter MMF regulation

In recent years, Chinese money market funds (MMFs) have thrived thanks to their ability to generate attractive yields vs. alternative investments (including bank deposits) and the convenience they offer investors. In fact, since June 2012, the number of individual MMFs has risen from 72 to 372, while assets under management have increased 13-fold to CNY 5.3 trillion (USD 815 billion) – a size that makes the industry systemically important.
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October 2017

Tough times are the right time to think about ultra-short duration strategies

In today’s volatile, low-yield world, where corporate treasurers are working harder than ever to generate the returns they need from short-term cash, ultra-short-duration strategies may represent an increasingly attractive proposition.
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September 2017

Time to get your house in order: Gearing up for European Money Market Fund (MMF) Regulation

Two months on from the finalisation of the European MMF Regulation, it’s all too easy to feel that implementation in January 2019 is a long way off. But, as a treasurer, taking a proactive approach to thinking ahead can position you to make the most of the opportunities that the regulation will bring. So what do you need to do? And, crucially, when do you need to do it?
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August 2017

A flexible investment policy: a firm foundation for better cash segmentation

For corporate treasurers, a well-articulated cash investment policy is the vital first step towards bridging the gap between shifting market circumstances and investment goals. But the best investment policies also need the flexibility to adapt to changing market conditions.
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July 2017

Is it time for corporate treasurers in Australia to revisit the US dollar?

For Australian cash investors, a multi-year run of attractive returns from domestic short-maturity investments has ended as the Reserve Bank of Australia (RBA) cut interest rates to a record low, the Australian dollar weakened from three-decade highs and domestic commercial banks’ demand for time deposits declined due to new restrictions imposed by Basel III.
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June 2017

J.P. Morgan PeerView Survey: see how your cash strategy compares

In the early months of 2017, nearly 400 CIOs, treasurers and other senior decision-makers – each representing a unique entity and from all sectors of the global economy – responded to the J.P. Morgan Global Liquidity Investment PeerViewSM survey.
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May 2017

The unusual evolution of China’s monetary policy

Historically, monitoring the People’s Bank of China’s (PBoC’s) monetary policy was relatively challenging due to opaque monetary policy meetings and limited communication from policymakers. Fortunately, the central bank’s limited set of interest rate tools meant that interpreting PBoC changes was relatively simple. By using a combination of interest rates (deposit rates, lending rates and reserve retirement ratio) and influence (window guidance and loan targets), the PBoC could determine the cost and quantity of money available to domestic, mainly state-owned enterprises.
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April 2017

Put cash in its place

In the depths of the credit crunch, corporate treasurers fought to preserve capital and maintain the right amount of liquidity for their organisations. Now, with money markets back on a more even keel, but short-term interest rates still close to zero, many treasurers are shifting their focus to analysing cash flow to identify surplus cash – and proactive strategies to make that cash work harder for their organisations.
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March 2017

Built to fit: a bespoke cash investment policy for Asia Pacific

Asia Pacific is generally regarded as a complex place to do business, especially when compared to the largely standardised markets of the United States and Europe.
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February 2017

Looking ahead: European Money Market Fund Reform

The Regulation of the European Parliament and of the Council on Money Market Funds is a big name with some big implications for the way that money market funds in Europe are likely to be classified and structured.
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January 2017

What are the latest challenges facing corporate cash investors in China?

The Chinese Renminbi (CNY) is the worst performing Asian currency this year, down 5.67% vs. the USD. This marks the third year of declines with the red-back hitting an 8 year low.
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December 2016

Choosing and using money market funds in Asia Pacific

With Basel III set to change how banks view deposits there is an increasing interest amongst corporates in off-balance sheet solutions such as Money Market Funds (MMFs). Money market funds are an attractive option to corporates because of the safety and liquidity they offer, as well as the ability to invest across a broad spectrum of highly-rated assets.
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November 2016

An overview of money market reform in China and its implications for corporate treasurers

In December 2015, the China Securities Regulatory Commission announced the introduction of new guidelines for domestic money market funds. These guidelines, which came into force on February 1, 2016, represent the most significant and comprehensive changes to the rules governing Chinese money market funds since the industry was established in 2004.
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October 2016

The impact of Basel III on corporate cash investment in Asia Pacific

Basel III is set to dramatically change how banks view deposits; a development that is already having an impact on corporate liquidity management. Corporate investors need to understand that going forward non-operational deposits are becoming ever more unattractive to banks and we are likely to see increasing instances of banks turning away some deposits.
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September 2016

How is J.P. Morgan Asset Management’s short-term investment product portfolio evolving to meet the changing needs of investors?

The short-term investment landscape is certainly growing and it is not just the European and US regulatory changes driving this growth; factors such as Basel III and the interest rate environment also act as catalysts to this growth.
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August 2016

What you need to know about US money market fund reform

In October 2016 new Securities and Exchange Commission (SEC) rules governing money market funds (MMFs) take effect. Like earlier SEC reforms, they aim to make the MMF industry stronger and more transparent.
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July 2016

How J.P. Morgan Global Liquidity provided a successful short-term liquidity strategy to Alibaba, a global leader in online and mobile commerce

With a strong RMB cash position in onshore China, Alibaba’s treasury team were looking for short-term liquidity investment tools that would give them a better yield without compromising liquidity.
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June 2016

How understanding Basel III’s impact enables better segmentation and structure of liquidity portfolios

Basel III regulations redefine global standards for bank capital, liquidity and leverage, and will profoundly impact how banks manage their balance sheets.
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May 2016

The importance of instituting a cash investment policy

With markets ever changing, a well-written cash investment policy is a must for corporate and institutional investors striving to meet critical cash objectives.
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April 2016

China’s interest rate liberalisation: Why investors will need a keener focus on credit and risk analysis in a challenging new terrain

The Chinese government is committed to further financial sector reform, believing that market-driven interest rates and profit-minded institutions are central pillars of efficient capital allocation and continued economic growth.
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March 2016

What do more than 400 senior treasury decision-makers have in common?

The J.P. Morgan Global Liquidity Investment PeerViewSM survey results provide unique insight for cash investors.
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February 2016

What is the 2016 outlook for Chinese money markets?

Over the last ten years we have seen some dramatic changes in the Chinese economy and financial markets.
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January 2016

What’s ahead for the global economy and markets in 2016?

Read the 2016 outlook – Mixed expectations by Stephanie Flanders, Chief Market Strategist for the UK and Europe at J.P. Morgan Asset Management.
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December 2015

What advantages do automated cash investment systems – like J.P. Morgan’s Global Cash Portal – have over manual processes for trades and confirmations?

Achieving more visibility, control and efficiency are key priorities for treasurers in the current business environment.
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November 2015

According to the 2015 PeerView Survey, what percentage of participants plan to make changes to their investment policies given the current regulatory landscape?

Approximately 40% of those we surveyed said they plan to make changes to their investment policies given the current regulatory landscape.
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October 2015

Why are Chinese repo markets such a critical component of RMB money market funds – and what are the benefits for corporate investors?

Repos are the largest, most liquid money market instrument in Chinese markets and an important investment option for RMB money market funds.
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September 2015

How will you manage liquidity through periods of rising interest rates?

Rising rate environments can challenge even the most sophisticated fixed income investor. So, with UK and US interest rates poised to rise from levels that are near their all-time lows, treasurers must be prepared – and take the time to reassess their bond portfolios.
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