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Strategic Financing in Asia

by Helen Sanders, Editor

Few discussions about the growth of world trade can exclude Asia, particularly China, with reference to both intra-region and global trade patterns. With continued market uncertainty and speculation about the future shape of the Eurozone, some companies have decided not only to direct their strategic focus towards Asia, whether for procurement, manufacturing or sales, but also to finance these activities locally. This trend does not conflict with that of centralisation of cash and treasury management activities into regional or global treasury centres. Indeed, as John Laurens notes in this month’s Treasurer’s Voice, we are witnessing a growth in Asian, and China-based shared services, including treasury. There are a variety of drivers for the growth of financing in Asia, as Asian multinationals seek to expand outside of the region, and foreign multinationals increase the scale of their operations within Asia. This article considers some of these recent trends, and features expert comment from John Laurens, Head of Global Payments and Cash Management, HSBC and David Koh, Head of Treasury Services, Greater China, J.P. Morgan.

Why finance outside the home market?

David Koh, J.P.Morgan first explains why foreign multinationals are attracted to financing in Asia,

“The main driver for a company’s decision to source financing in Asia is access to liquidity. European markets remain uncertain, and it is as yet unclear as to how and when that uncertainty will be resolved. In contrast, Asia is seeing higher levels of liquidity, with considerable investment appetite amongst institutional investors and banks in Asia with ambitious growth plans in the region. This is encouraging multinational corporations, particularly those with a strategy for growth in Asia, to take advantage of liquidity opportunities, and so we are seeing them borrowing more here in a range of currencies.”