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Sustaining a Long-Term Profitable Treasury – Gaining from Emerging Markets

by Murat Erden, Group Treasurer, Turkcell

This article discusses new ideas and challenges in treasury management, especially how companies can maintain long-term profitability within changing global and emerging market dynamics. Under the current volatile market conditions, it becomes critical for corporate treasurers to identify the appropriate liquidity and risk management strategies to generate maximum value in the long term. The world is experiencing one of the biggest economic revolutions in history, as economic power shifts from the developed world to emerging markets. As the developing economies contribute less to global growth, emerging economies have been rising as the key driver behind global trade and expansion. Operations in emerging markets need to be assessed carefully bearing in mind the multiple challenges and the various profit opportunities identified. There are many lessons to be taken from best practice investment decision-making practices in emerging economies which can be adapted to the corporate treasury processes of developed economies.

Following an ongoing series of market reforms, emerging economies are growing much faster than the developed ones. According to IMF, this year they are growing almost four times as fast. Emerging economies account for 30% of the world GDP at market exchange rates and over half are using purchasing power parity to take account of price differences. There is also ample global liquidity to fuel global economies, as well as emerging economies. Over the past year, broad money supply has increased significantly. The surplus of money growth over and above the growth in nominal GDP, a crude measure of the money available to be invested in financial assets, has been growing at its fastest pace for years.

Emerging economies have been rising as the key driver behind global trade and expansion.