Asian TF needs set to soar according to new survey

A new survey released by HSBC shows that traders in Asia are preparing for a dramatic increase in trade finance needs.

The survey, named the Trade Confidence Index, reveals that Indian traders are expecting the biggest growth, with 60% expecting their need for trade finance to increase in the next six months, followed by over half of Southeast Asian traders.

Furthermore, the vast majority of those who will need trade finance are confident of having access to the funds, with just 1% of Indian traders and 7% of Southeast Asian traders uncertain about their likelihood of gaining financing.

However, traders cite foreign currency exchange rates and trade regulations as the largest potential barriers to growth, with over a third of Hong Kong-based traders continuing to see exchange rates having a damaging effect on their businesses.

Chris Lewis, HSBC’s head of trade and supply chain for Greater China, says: “Since the inception of the survey more than a year ago, traders have told us that foreign exchange is a concern. However, we have continued to see their confidence grow, which may be an indication that while foreign exchange is one of many risks that global businesses must constantly look to manage in order to succeed, it is not necessarily a barrier to growth.”

Additionally, traders in mainland China and Hong Kong are increasingly optimistic about trade prospects with Southeast Asia and within Greater China over the next six months.

A fifth of mainland Chinese traders reckon that Southeast Asia will offer the biggest growth opportunities in the next six months, up from 10% half a year ago, while over half of Hong Kong traders are optimistic about future trade with its Greater China partners; mainland China, Taiwan and Macau.

Lewis adds: “Trade between Hong Kong and mainland China is stronger now than ever, with new orders from the mainland driving Hong Kong exporters to boost capacity.

“The evolving dynamics of intra-Asian trade has put Greater China at the centre of activity with markets like Australia, Indonesia, Malaysia and Vietnam continuing to gear up for increased trade with this bloc. At the same time, Greater China is increasingly looking to do more trade with Southeast Asia. In the mainland, despite anticipated renminbi appreciation, China’s exports will continue to show strong growth driven by demand globally and, increasingly, from emerging markets.

“There is opportunity to win on both sides, tapping into the region’s emerging domestic consumer markets as well as playing to each market’s competitive advantages in the supply chain.”