Continued Uncertainty Around Economy, Reveals EuroFinance Poll
Conditions are certainly improving for companies in North America, but the financial crisis isn’t over yet. That’s the verdict from the audience of corporate treasurers and bankers at the 14th Annual EuroFinance International Cash and Treasury Management Conference, held in Miami.
Hundreds of treasurers gathered in Miami to discuss both the challenges and solutions in today’s treasury profession. EuroFinance conducted an interactive voting session to gauge treasurers’ sentiments on pressing issues related to the economy.
Using electronic voting, 59% of delegates at the conference said that they were feeling bullish overall with regard to prospects for 2010, and 82% said that the economy was progressing in line with or ahead of their expectations. But almost three-quarters still have concerns, with 72% saying that more bad news will emerge relating to the financial crisis.
Andrew Sawers, editorial director at EuroFinance, said: “Our audience of treasurers and bankers have a front-row seat on how the business environment is developing, so these results are encouraging but there is clearly still a lot of uncertainty. Evidence for this emerges from the fact that ‘forecasting cash flow’, ‘counterparty risk’ and ‘the economy’ were the top three concerns for delegates.
“However optimistic you are, it is very unsettling if you find it difficult to predict the future, to know whether your counterparty will survive, or what path the economy will take,” explained Sawers.
At the same time, 86% of delegates said that funding constraints were not affecting their ability to capitalise on good opportunities, a very positive result that suggests that the worst of the credit crunch is behind us. Moreover, half said that borrowing conditions had improved for their company in the last six months with only 5% reporting a deterioration.
“This mixture of ‘positive’ experience and ‘negative’ concerns tells us that many companies are, individually, feeling fine, but that there isn’t an all-pervading, ‘feel-good’ factor,” said Sawers. “There is a danger that this itself could hold back economic progress if it results in excessive caution.”
On the international scene, an overwhelming majority – 91% of delegates – said that China should revalue the renminbi (RMB). Half don’t expect China to do so, however, while more than a third – 37% expect a relatively minor adjustment of up to 5%. The current situation in Greece also caused much concern, with fully 39% expecting that country to go into default.
On the question of how regulation will affect the financial sector and its corporate clients, a large majority – 86% – feel that the drive for new regulation has become too politicised, and 65% are concerned that the threatened legislation and bank taxation will affect banks’ service offerings for their corporate clients. There is still a certain amount of disgruntlement towards the banks, however, as 79% of respondents felt that banks have unfairly used the crisis as a way of getting better margins.
“Given the size and nature of our audience, we think these findings paint an accurate picture of general attitudes in the business world. People want to feel optimistic but they are nevertheless still exercising caution. But while these results reveal that there is still a level of trust missing from the marketplace, attitudes are heading in the right direction,” concluded Sawers. “It will be interesting to compare these results to the sentiments of treasurers and bankers at our Geneva conference in October, as we expect to see some fallout from the situation in Greece.”