CorporateTreasurer

Protecting profits and managing risk in 2019

By KVB Kunlun | Nov 23, 2018

With the foreign exchange market looking at increasing uncertainty in the year ahead, how you manage your foreign exchange risk will be crucial to success in the year ahead.

2018年对于全球经济而言是不平静的一年,中美贸易战正式开打,全球贸易保护的势头逐步抬头。在后金融危机时代,各国经济复苏的进程快慢不一,美联储坚实的进行加息的步伐,而不少国家仍然保持着季度宽松的货币政策,这造成了全球资本的加速流动,金融市场尤其外汇市场的波动明显加大。

2018 was meant to be a year of economic unrest. Tensions between China and the US have escalated to a trade war, marking the certain rise of global trade protectionism. This is further aggravated by the varied economic recovery of nations across the globe. The US Federal Reserve has consistently increased interest rates while plenty of nations still hold loose monetary policies to spur trade and investment. The consequence is an acceleration of global capital flows and increased financial market volatility, especially in the foreign exchange market.

多个新兴市场国家的经济在今年遭遇了严峻的动荡,例如土耳其,阿根廷,这些国家的货币也出现了剧烈的下跌。美元兑土耳其里拉在年中最高升值了接近一倍,汇率的波动进一步引发了资本的外逃,从而形成了恶性循环。

A number of emerging markets experienced severe economic shocks this year, including Turkey and Argentina whose respective currencies dropped sharply. For example, the lira weakened to an all-time low in August. The precipitous drop triggered a flight of capital which subsequently maintained pressure on the lira.

随着贸易保护主义的抬头,中美贸易战的打响,对于众多国家的进出口企业造成了相当的压力。关税的提高造成企业面临更严峻的同业竞争压力,而波动更加剧烈的外汇市场则让企业同时面临汇兑损失。

The tensions between US and China have hurt import and export firms in many countries. Increased tariffs lead to fierce competition, foreign exchange volatility and inevitable trading losses as a result, especially if currency exposure is unhedged.

在11月4日中国东方航空刚刚公布了2018年前三季度的业绩,其中汇兑损失高达21.57亿人民币,东方航空的净利润为44.9亿人民币,如果没有遭受汇兑损失,东方航空的净利润可以提高接近50%。而东方航空出现巨额汇兑损失的主要原因就是人民币兑美元在2018年产生的大幅贬值。但同样是航空公司, 中国春秋航空在2018年并没有遭受严重的汇兑损失,春秋航空例如美元资产与风险对冲,规避了人民币贬值对企业财务造成的负面影响。

To provide a striking example, on November 4, China Eastern Airline released its third quarter 2018 earnings, and announced a foreign exchange loss of Rmb2.15 billion ($309 million). The major cause of the loss was the significant depreciation of the renminbi versus the US dollar in 2018. The net profit of China Eastern Airline was Rmb4.49 billion during that period and could have been 50% higher. In contrast, China Spring Airlines didn’t suffer an foreign exchange loss in 2018 having invested in US dollar assets to hedge against renminbi downside.

2019年我们预期金融市场,尤其外汇市场的波动会至少维持2018年的波动幅度,甚至更大,所以低于企业而言,更加需要建立完善的外汇及司库管理体系来确保企业在金融市场剧烈波动的情况下,自身的利润不会受到侵蚀。

We expect the financial markets in 2019 to be volatile, especially foreign exchange – potentially more so than 2018. In these conditions, companies need to carefully consider how they manage their foreign exchange risk. Incorporating a treasury management system that can cater for this should be necessary for most enterprises who want to maintain profitability.

首先一套完善的全球结算网络配合金融科技的交易方式,是支持企业走向全球的最基本的砝码。智能API是金融科技支持企业高效结算的重要工具。金融服务商将实时可交易的外汇数据源通过API的形式推送给企业,企业在需要交易的时候,通过API将交易信息传输给金融服务商,交易的确认也由API完成。在结算日,企业同样通过API将结算的具体信息传输给金融服务商,在结算完成后通过API回复。API的使用让企业大幅提升了外汇结算的效率,节省了人力成本,减少了外汇交易以及结算过程中出错的几率,同时可以随时掌握最优的可交易的汇率,在市场出现大幅波动的时候,可以及时作出应对。

For companies with growing international trade and therefore more exposure to foreign exchange, a sophisticated global settlement network is the cornerstone for globalisation. Smart API technology is an important tool to support efficient settlement allowing an enterprise to connect operations with a financial service provider who can send through real-time foreign exchange data, and receives foreign exchange trades request back when required.

API can also be used to confirm completion of trades. On settlement day, enterprises can transfer the settlement information to a financial service provider via API after the settlement is completed. The use of API technology improves the settlement efficiency and saves on manpower cost. Also, it can reduce foreign exchange trade and settlement errors, inform enterprises of the latest exchange rates and prompt a fast response to the abnormal market fluctuations.

第二企业需要建立对于外汇风险的管理监控体系。企业的监管体系与模型需要包括real time limit control, forward cash flow control, counterparty risk monitor and control, stress testing, FX rate monitoring. 建立监控体系的目的是让企业能够非常清晰的了解外汇现金流,并且掌握这部分现金流所对应的潜在汇率风险,以及这部分的汇率风险对企业的盈利可能产生的负面影响,让企业的财务管理人员能够根据潜在的风险制定相应的避险策略。

Secondly, enterprises need to establish a risk management and monitoring system for foreign exchange risk. The system should include real time limit control, forward cash flow control, counterparty risk monitoring and control, stress testing, FX rate monitoring. This will allow enterprises better control over their cash flows and manage the exchange risk of these flows. Also, the exchange risks might have negative effect on the profit margin of the enterprises. The monitoring system should provide confidence for senior management to decide a corresponding hedging strategy to mitigate risks.

第三企业需要有专业的团队和外汇专业人才来执行管理层所制定的避险策略。选择合适的外汇产品,根据不同的市场环境来选择对冲的具体策略是企业能否科学的管理汇率风险的关键。如果企业自身没有合格的专业团队来完成这项任务的话,则需要专业的外汇服务商来帮助企业完成对冲产品的设计与执行。

Thirdly, enterprises need professional teams to execute an approved hedging strategy. Choosing appropriate foreign exchange products to hedge will depend on the market environment and the key objective. If enterprises don’t have qualified teams to fulfil this requirement, professional foreign exchange service providers can help enterprises complete the design and execution of the hedging product.

2019年全球经济仍然面临非常高的不确定性,大国之间贸易紧张的局面很难有明显的改善,金融市场的波动率仍将维持比较高的水准。企业提升自身的软实力,做好汇率风险的对冲将非常重要。

The world’s economy faces high uncertainty in 2019. The intense trading atmosphere between nations is hard to change and financial market volatility will remain high. It is important for enterprises to prepare for the worst and protect their business.

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