Year-of-the-pig outlook burdened by recent blows

Some possibly liberalized regulation by China’s central bank, PBOC, could allow more sophisticated cash pooling and in-house bank account structuring across the limbs of corporations.

This is but one in a line of predictions for the coming year, made in a Treasury Today article written by Meng Kei Sou – chief of staff at a Hong Kong-based estate company named Chida Estates. Or, actually, the article is a written version of his own brief presented to his company’s regional executive committe.

Dull background

In his own words, Meng Kei Sou presents his view ”against the backdrop of a synchronised global economic slowdown, escalating Sino-American trade and growing geopolitical conflicts” – and, on top, a number of bombshell news which at the end of the past year created a new wave of concerns. China’s slowing GDP growth and contracted M2 money supply contributed negatively.

Key cities connect

Moving down the list of potential movers in the coming year, Meng Kei Sou points to the strategy for economically integrating Guangdong, Hong Kong and the Macau Greater Bay Area (abbreviated GBA). The strategy, pushed by the Chinese government, serves to leverage on the difference in comparative advantages between 11 closely located cities.

In the money area the writer also notes uncertainty after a series of US rate hikes, which pushed North American bank stocks down by 8 percent since the first half of 2018. Asymmetric yield pressure short duration liquidities, he notes.

Part of his recipe to deal with it all is to ”reposition the treasury function as an integral part of corporate competitive strategy in the long run.”