Wednesday, 13 April 2016

CHAIRMAN'S MESSAGE - Sean Edwards, ITFA Chairman / Head of Legal at SMBC

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,

Best wishes,
Sean Edwards

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