Dear Members and
Friends,
I write this fresh
upon my return from the ICC Banking Commission Conference in Johannesburg where,
I am pleased to say, the ITFA contribution to the development of international
trade was evident. The panel on the new Standard Definitions for Techniques of
Supply Chain Finance drew a large crowd and I was able to make the point that forfaiting
offers a number of advantages over some of the other techniques. This does not
mean, of course, that forfaiting is always the most appropriate choice for a
given situation. The opening up of the
supply chain, especially for SMEs, operating at the lower levels, was a big
theme of the conference. It is clear that help is still needed from government
and multilaterals and opportunities for our members, whether that is in
offering forfaiting or other products.
Looking at the macro
picture, Q1 saw large and sometimes contradictory swings ranging from improvements
in capital markets due to supportive Central Bank stances and a turnaround in
EM fortunes to political instability in some regions coupled with the recent
terrorist attacks and immigration crisis hitting the MENA region and Southern
Europe.
One of the key concerns will clearly be the
direction EM have taken over recent weeks. Since the start of the year,
emerging markets have had their fair share of negative market-related news,
from disappointing economic data to an ever strong dollar, emerging markets
bore the brunt of the major part of a marked decline in global economic
activity. Though the sharp decline in a select few commodities (such as oil and
steel) could have been interpreted as beneficial for emerging markets
(resulting in lower input costs), it is no secret that a large part of the
livelihood of EM depend on profitability from commodities most notably grains.
However, EM saw a sharp turnaround during March,
mainly on the back of accommodative stances by the ECB and Chinese Central Bank
but most importantly a more dovish than expected US Federal Reserve, the result
of which was a significant decline of the dollar against many emerging market
currencies easing US Dollar debt burdens. This has spurred on demand within EM
and we are sure to see significant improvements in economic data over the
coming weeks, with improvements in commodity prices, especially oil, already apparent.
Chinese economic indicators are additionally pointing towards a shift, albeit
slight, in investor sentiment towards the region.
In this month’s
Newsletter, we keep you informed on the ITFA Young Professional roundtable
which was held earlier in January. We also keep you up-to-date on the cross-industry
initiative, which establishes standard definitions for techniques of Supply
Chain Finance.
I wish to remind our readers of the events
organised by ITFA. The upcoming event which is being held on 12 May in Amsterdam
is the Annual Spring event which is eagerly anticipated and attended by many.
For more details, please click here.
We look forward to hearing from you with
any feedback you may want to share with us by sending an email to myself, any
of the Board Members or to our general email, info@itfa.org.
Best wishes,
Sean Edwards
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