Redefining Treasury: Voices from Hong Kong

Geopolitical flashpoints are affecting treasurers. Those in the freight industry report the impact of disturbances in the Red Sea; brokerages say they wrestle with volatile FX movements. With rates stubbornly high in much of the world, treasurers are seeking to reduce risk, diversify, keep positions at the short end of the curve, and find new solutions for FX risk where classic hedging is prohibitively expensive.

"I feel that uncertainty is the new normal." - Treasurer

"We’re keeping it very stable rather than relying on judgement calls on the interest rate curve… we do not bet or try to beat the market." - Treasurer

It takes time and resources to build AI systems, and investment is required in training, data security and fit-for-purpose IT if treasurers are to make productive use of opportunities. Many treasurers report the successful gathering of quality data but lack clarity on the right tools to conduct meaningful analysis.

Treasurers tasked with developing AI are already time-poor. It is common for treasurers to report that 70% of their time is spent on classic treasury functions, and 30% on driving change.

"We have a lot of data already. We just need to find time to find the tools to help us to do the analysis and have a better look at our business." - Treasurer

In a high-rate environment, the accuracy of cashflow forecasting is extremely important. The volatility of the world – unpredictable tourism numbers for companies in the travel industry, for example – makes accurate forecasts still harder. Treasurers want technology to help them.

"We have had huge data for many years but we can’t really use it efficiently to make a forecast of what we are going to receive tomorrow, or the day after." - Treasurer

"We’re a small company and interest rates are really high, so cashflow forecast accuracy – how much volume of each brand we can sell – becomes very important" - Finance Director

Treasurers bemoan the time-consuming burden of KYC regulations, particularly as they relate to payments. They report discouraging processes and extensive documentation requirements. In specific areas like cross-border payments, particularly involving China, there is a need to reduce the paperwork burden.

This is a significant challenge, because treasurers report that expansion into new markets is a key priority.

"On cross-border payments, it’s not a technical hurdle at the moment but a regulatory hurdle" - Corporate finance head

"Banking compliance is getting more and more strict. Increasingly our cross-border transactions have been paused due to compliance checks and the funds are being held for weeks" - Finance Director

Treasurers vote overwhelmingly in favour of the use of Regional Treasury Centres (RTC) as a mechanism for increased regionalisation in Asia. Far fewer prefer a single Global Treasury Centre.

However, the decision of where to locate an RTC is not as bifurcated as might be expected: unless the overall operation has a tilt towards mainland China, treasurers report that Hong Kong and Singapore offer a similar experience and opportunity.

"We did a comparison between Hong Kong and Singapore and they are fairly similar" - Treasurer

"I see no difference between Singapore and Hong Kong. Hong Kong has a little bit of benefit when it comes to entering China" - Treasurer

These insights were based on a survey conducted across 34 corporate finance and treasury professionals who attended the HSBC’s Redefining Treasury Hong Kong event in May 2024.