As I write this column, much of Europe is basking in the early-spring sunshine and looking forward to what we all hope will be a very prosperous and pleasant summer. Many of you will be aware that this is the year of the horse in the Chinese zodiac calendar, which apparently bodes well for businesses involved in wood or fire, including those in the lumber, agricultural and media industries. It’s not so good for businesses associated with metals and water, though, so if you’re the treasurer for a mining or utility company, you may want to keep your head down.
Someone who is likely to be unfazed by whatever the year of the horse brings is Toby Shore, corporate treasurer and chief risk officer at Dubai Aluminium. He is used to feeling the heat because he works in the United Arab Emirates, where temperatures typically soar above 40°C in the summer months. In our profile interview, starting on page 26, he talks about the opportunities and challenges that come with being a professional treasurer in the Middle East.
While there is a feeling that the world economy is warming up nicely, there is still the potential for a cold snap this year. In February, US growth for the last quarter of 2013 was revised downwards to 2.4%, a significant fall on the original estimate of 3.2%. Furthermore, the emerging markets got off to a turbulent start in 2014, as they reacted to slowing growth in China and the tapering of quantitative easing in the US. And although investor confidence in the eurozone is now at its highest level since April 2011, according to the Sentix Investor Confidence index, growth in the region is still weak.
It is for these reasons that treasurers are not getting carried away with what may appear, on the surface, to be a return to the good times. Instead, they remain vigilant about the very real threats that their companies face. We address some of those threats in this issue, looking at the topic of negative interest rates, on page 20, and examining the options open to companies that want to manage their currency risk in emerging markets, on page 36. We also explore how treasuries can create a best-in-class risk management programme, on page 34.
It’s not my intention to dampen your spirits amid this lovely sunny weather, which we will hopefully still be having as you read these words. But, as the proverb goes, where there is sunshine, there is also shade. And, after the financial crisis, treasurers know this better than anyone.