MANAGEMENT

Insights From CFO Innovation’s Forums: What a Thousand CFOs Are Thinking

So far this year, more than a thousand CFOs and other finance leaders have attended CFO Innovation’s conferences in Shanghai in March, Jakarta in April, Singapore in May, Manila in June and Bangkok in July. Still to come are forums in Hong Kong and Kuala Lumpur.

It is remarkable how similar the concerns and areas of interest of finance functions are, regardless of geography. The issues that resonate include the following:

  • The uncertain global, regional and national economy, which look relatively stable but could be slammed by Donald Trump’s America First trade protectionism, rising interest rates and withdrawal of quantitative easing in the US, Europe and Japan, a potential economic hard landing in China, unpredictability in North Korea, territorial disputes in the South China Sea, and Black Swan events.
  • Disruption of incumbent business models by new technology and digital competitors – but also opportunities to enhance processes and build new businesses by deploying new technology tools such as robotic process automation, analytics and artificial intelligence.
  • Currency, political and regulatory risk, particularly in Malaysia, the Philippines and Thailand – and even Singapore
  • Recruitment and retention of finance talent, especially in financial planning & analytics, and in business partnering roles   

The lesson: Monitor sentiment, because if it grows strong and persists long enough, it could eventually affect the real economy. But don’t panic

Sentiment and real economies

While the delegates continued to be interested in currency risk, analytics, technology and talent management, the initial worries about the global economy and international trade expressed in Shanghai in the first quarter had become muted by the time the Manila forum was held in the second quarter. But the jitters were back in Bangkok in the third quarter.

The US, Chinese, European, Japanese and ASEAN economies (as well as Hong  Kong) continued to show resilience going into the third quarter, even as the populist and protectionist instincts in France and Germany appeared to have been tamped down. North Korea’s missile tests and the threats and counter-threats between Trump and North Korea subsequently roiled nerves again.

The ups and downs highlight the perceived uncertainties in the global economy. But as one CFO in Singapore observed, the volatility stems more from sentiment and news flow, rather than structural changes. The real economy, and thus business growth and prospects, remains stable, at root. The economists who spoke in the various forums uniformly forecast solid economic growth for Asia in 2017 and 2018, with the Philippines, India and China predicted to top the league table.

The lesson: Monitor sentiment, because if it grows strong and persists long enough, it could eventually affect the real economy. But don’t panic because the real economy can remain robust despite Trump, North Korea, Brexit, terrorist attacks and other worries.

In Asia, companies should continue to invest and expand because consumers are continuing to earn and spend, infrastructure is being built and improved, exports have recovered, and general business activity remains buoyant. In this environment, the overly conservative and timid business could be left behind by more agile competitors.

Watching the tech disruptors

Also destined to lose out: Companies that fail to recognize and respond to the impact of technology on their business. The disruption can hit the enterprise’s very business model, as transport companies, retailers and travel agencies are finding out with the likes of Uber, Grab, Amazon, Alibaba and Tencent eating into their market shares.

But again, the feeling was that it is not yet time to panic. The disruptors will not have it all their own way, as evidenced by Uber’s recent problems in the Philippines (the regulator slapped a one-month suspension on the company for non-compliance with a driver recruitment directive). 

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