Transcript Slide 1

HSBC Bank USA, N.A.
Trade and Supply Chain
Trade & Supply Chain
May 2010
Global Macro Trends
 Emerging markets are growing faster than developed markets
 In Q1 manufacturing and services output in emerging markets rose at fastest rate since Q4 2007
 Manufacturing sector reported the largest quarterly rise in output since data was first available in
Q2 2004
 Employment shows largest increase since Q4 2007
 Sales buoyed by rising exports, which showed the largest quarterly increase since Q2 2004.
 HSBC expects Chinese GDP to expand at a rate of 9.5% in 2010 after an 8.5% gain in
2009 – despite drop in U.S. consumer demand
 Emerging market growth impacting commodity prices
 Chinese demand for commodities and other goods has kept prices high
 Elevated commodity prices will continue to bolster the export earnings of emerging nations,
supporting intra-regional trade within the emerging world
 Economic recovery across emerging nations accompanied by a return of pricing pressures,
particularly for raw materials
*Source HSBC Emerging Markets Index Q4 2009 and Q1 2010
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Global Macro Trends
 Economic recovery worldwide beginning to materialize in Q1 2010
 All nations, both developed and emerging, have seen a robust manufacturing response in recent
quarters, reflecting an end to destocking and a synchronized recovery in world trade
 U.S. sales rose 1.6% in March from the prior month
 Retail sales have increased 8.2% in the past year
 World trade grows faster than GDP
 Historically World Trade has grown at a faster pace than GDP
 Although world trade declined during the 2007-9 global economic crisis, we anticipate that trade will
recover quickly when GDP growth returns
*Source HSBC Emerging Markets Index Q4 2009 and Emerging Markets Index Q1 2010 and U.S. Department of Commerce
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Trade and the Global Economy
 Supplier / Buyer outlook – Cautious optimism in developed markets
 Small and medium business conducting cross-border trade report:
 Increased optimism about global trade prospects
 Increased optimism about the global economy
 Confidence that they will have access to adequate credit to finance business growth
 Trade continues with a stable focus on risk management throughout the trade cycle
 Due diligence on trading partners
HSBC Trade Confidence Index 1H 2010 – global
overview
128
104
107
108
109
110
111
111
UK
Canada
US
Singapore
HK
114
115
120
129
132
133
134
120
116
95
France Germany Australia
Saudi Malaysia Mexico
Arabia
Note:
(1) The Global index is the unweighted average of the 17 markets listed above in 1H10
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*Trade Confidence Index – May 2010
China Indonesia Brazil
Vietnam
India
UAE
Global
index
U.S. Trade Outlook
 Buyer/Supplier Outlook – US Businesses Expect increasing trade volume
Outlook on trade volume in the next 6 months
48
44
38
31
14
10
8
3
%
2H09
1H10
Decrease Significantly
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2
1
2H09
1H10
Decrease Slightly
2H09
1H10
Maintain Same Level
2H09
1H10
Increase Slightly
2H09
1H10
Increase Significantly
U.S Trade Outlook
 Emerging markets are most promising regions for growth
%
27 (+13)
Latin America
23 (+3)
Greater China (HKG, PRC, TWN, Macau)
16 (-10)
Canada
7 (-1)
Southeast Asia
Middle East
##
Western Europe (excl UK)
Rest of Asia
^ UK
Australia/ New Zealand
#
Central/Eastern Europe (excl Germany)
Sub-Saharan Africa
^ Germany
Don’t Know/Refused
Notes:
Greater China includes Hong Kong SAR, Mainland China, Taiwan, Macau
^ New code added in 1H10
from Central/Eastern Europe to Central/Eastern Europe (excl. Germany) in 1H10
6#Modified
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##Modified from Western Europe (Incl. UK) to Western Europe (excl. UK) in 1H10
1H10
(Change
from
2H09)
5 (+1)
4 (-6)
4 (0)
3 (/)
3 (+1)
2 (-3)
1 (-2)
1 (/)
4 (0)
+Figures with less than 1% mentions are not shown.
U.S. Trade Outlook
 Need to mitigate risk still significant
U.S. Outlook on Supplier Non-Delivery
77
11
2H09
11
7
%
79
5
1
1H10
2H09
Increase
Significantly
1H10
Increase
Slightly
2H09
1H10
Maintain Same
Level
2H09
1
1H10
Decrease
Slightly
1
2H09
1H10
Decrease
Significantly
Note: Figures may not add up to 100% due to rounding and the exclusion of “Don’t know/Refused” responses .
U.S. Outlook on Buyer Default
70
14
%
1
2H09
12
11
8
2
1H10
Increase
Significantly
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73
2
2H09
1H10
Increase Slightly
2H09
1H10
Maintain Same
Level
2H09
1H10
Decrease
Slightly
Note: Figures may not add up to 100% due to rounding and the exclusion of “Don’t know/Refused” responses.
2H09
1
1H10
Decrease
Significantly
U.S. Trade Outlook
 Exchange rates an increasing concern
%
40 (+11)
Fluctuating exchange rates
39 (+10)
Costs of essential services such as shipping, logistics and storage
35 (+9)
Government trade regulation
32 (-4)
Lack of product demand
29 (+3)
Insufficient margins or profitability
25 (-2)
Availability of credit / liquidity
15 (-4)
Rising interest rates
10 (-3)
Buyers defaulting on payment
8 (-4)
Suppliers not honoring agreed trade arrangements
Competition from other companies
Global economy contracts, business becomes unstable
Availability/costs of raw materials
Others
No barriers to growth
Don’t Know/ Refused
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2 (+1)
1 (-1)
1 (0)
7 (+6)
4 (-4)
3 (-1)
1H10
(Change
from
2H09)
Trade and the Global Economy
 Trends over the past 12 months
 Improving outlook in the economy/marketplace
 Continued focus on risk management:
 Due diligence on trading partners
 Return to traditional trade finance terms and products that provide greater structure and
control over transactions
 Working with financial providers that have capital strength
 Government and non-government agencies have implemented a number of stimulus
packages aimed at encouraging cross-border trade
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Summary
 U.S. businesses are cautiously optimistic about trade growth and the
global economy, while emerging markets are the most confident
 Confident about their need for and their ability to obtain trade financing
 Still cautious about buyer defaults and supply non delivery risks
 Emerging markets leading trade rebound and global economic recovery
and present an enormous opportunity for U.S. exporters and importers
 Latin America becoming an increasingly important player for U.S. companies
 Increased domestic consumption in emerging markets presents an opportunity for new
trade corridors that can benefit both developed and emerging economies
 Intra-regional trade will underpin global trade activity including intraregional trade between U.S. and Canada
 Fluctuations in exchange rates and trade regulations represent the
biggest barriers to trade
 International businesses need to focus on risk mitigation:
 FX
 Trading partner relationships
 Availability of finance
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