Top 5 trade finance news stories of 2016
With the Brexit vote, Trump’s presidential victory and many exciting fintech developments, 2016 has been a year full of surprises in the trade finance space.
As the year comes to a close, we have a look at the GTR website statistics to find out which stories our readers cared about the most in 2016.
1. Brexit vote
What seemed a remote possibility early in the year happened on June 23, when the UK voted to leave the European Union. In the immediate aftermath of the Brexit vote, the UK felt an economic shock, with shares and the pound plunging, but soon the markets more or less recovered those losses. Official statistics later revealed that the drop in the value of the pound seemed to be helping British exporters, and that the UK’s deficit on trade in goods and services had narrowed by £1.1bn in July.
Since the referendum, the UK has stepped up activities to forge relationships with countries outside of the bloc. The government has made numerous moves to salvage trade relationships with Asian countries, but many diplomatic and technical hurdles stand in the way of any bilateral free trade agreements. Experts have also put Africa forward as one region that could stand to benefit from the vote. In the meantime, the biggest question remains: what will be the deal between the UK and the EU? We looked at the different scenarios in our magazine story The Great British Break-Off, this year’s most-read article.
2. Blockchain ventures
Blockchain technology continued to be a hot topic throughout 2016, which saw a string of new announcements about blockchain ventures in the race for distributed ledger technology innovation. In September, Barclays conducted the world’s first live trade transaction using blockchain technology, involving the cryptographic signing of digital documents using a platform developed by Wave. Another landmark transaction took place in October, when Commonwealth Bank of Australia, Wells Fargo and Brighann Cotton conducted the world’s first interbank trade transaction combining blockchain technology, smart contracts and the internet of things (IoT). As we reported in our September/October cover story, the IoT refers to devices and sensors automatically communicating and sharing data, and is seen as a key innovation in the trade finance space.
Are you trying to make heads or tails of the many fintech partnerships, consortiums, hackathons and accelerator programmes? Our latest magazine fintech feature highlights some key initiatives. Or check out Fluent Network’s guide to blockchain for trade finance, a four-part series, which was one of the most popular reads of 2016.
3. Trump’s win
International trade was one of the cornerstones of Donald Trump’s campaign, and naturally his presidential win in the US was of huge interest to GTR’s readers. There is no doubt that Trump’s victory will represent a dramatic shift in the way the world conducts trade. Although his often vague presidential pledges make it hard to assess the damage to come, most experts agree that some loss will be suffered, particularly in the trade area. The president elect has already confirmed his intention to withdraw from the Trans-Pacific Partnership (TPP) in his first day in office, prompting more doubts about the future of the agreement. As a result, Asia Pacific states are now turning their focus to the Regional Comprehensive Economic Partnership (RCEP).
Among other campaign pledges, Trump has also said he would renegotiate the North American Free Trade Agreement (NAFTA), and “rip up” the Transatlantic Trade and Investment Partnership (TTIP). Experts are also convinced that his tough anti-trade and globalisation stance will result in far more disputes at the World Trade Organisation and lead the US into a head-on collision with China.
4. Iran’s opening
2016 was also the year that economic sanctions against Iran were finally lifted when the nuclear deal was implemented on January 16. The many events that followed have been followed closely by GTR’s readers. Soon after Implementation Day, Iranian President Hassan Rouhani went on a four-day visit to Italy and France, where he signed €40bn-worth of trade deals, including a €22bn order for 118 commercial passenger planes from Airbus. Companies across the globe have since been flooding to Iran to sign preliminary deals, but Iranian officials complain that the nuclear deal still isn’t yielding the expected trade and trade finance results, due to large European banks’ reluctance to re-open credit lines in the country. In September, Boeing and Airbus received the US Treasury’s approval of aircraft sales to Iran, but the lack of information about the financing of such sales signals slow progress for the reopening of transactions with Iran. And with the election of Trump, who has repeatedly said that the dismantling of the Iran nuclear deal was his “number one priority”, the agreement could be endangered.
5. Company moves and departures
The ‘On The Move’ section continues to be one of the most popular among GTR’s readers. Of particular interest this year was HSBC’s appointment of Natalie Blyth as its new global head of trade and receivables finance, replacing Stuart Tait, who relocated to Hong Kong. So was Barclays announcement that it had united its trade and export finance businesses under the helm of Baihas Baghdadi, after making most of its senior ECA finance team redundant at the end of January. GTR’s readers were also curious to read that Carole Berndt had left her role as head of global transaction banking at ANZ, a departure that was something of a surprise.
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