Asian Trade transaction volumes show recovery amidst the wake of COVID-19

The trade transaction volumes in Asia have shown a recovery in their performance with the creation of a V-shaped post-pandemic recovery. It is for the first time since the beginning of the year that the volumes present underpinning of 2019 levels, when monitored from the past couple of months, according to HSBC.

On the other hand, the proprietary data recovered from the global trade bank resemble a rise in demand for core trade products (import documentary credits, trade volumes, and export bills), as noted by GTR. The markets show a positive sign of recovery and growth across some major players in the market (Hong Kong, Singapore, China, and Malaysia).

Talking about the positive change in events, Ajay Sharma, regional head of global trade and receivables finance, Asia Pacific, at HSBC added, “Our supply chain finance volumes year on year, August to August, are up 50%,” says Sharma. “There are two drivers to this. The first is the new sign-ups to SCF programmes. The second is that in February we reached out to dormant clients on our SCF programmes, and reminded them that they had a line of credit available to draw down on their invoices that were pending. Subsequently, more than 1,200 suppliers started using the facilities on a regular basis.”

He also explained how the initial months oh the current year had to face a subdue due to the impact of Chinese New Year that was leaded by the pandemic for the rest of the months. However, the figures started bouncing back to consistency since August.

The improvement in trade volumes across the globe resonated with HSBC bank’s SCF activity, pushing it to boom in the consumer and retail sectors besides an additional push by telecom's and tech. However, the metals, mining, and automotive industries have suffered immense drawbacks by the impact of a worldwide pandemic.

Sharma also added up. “The big change has been that coronavirus has driven liquidity into the top end of the market. Our biggest and best customers do not and never have a problem, but now the extension of liquidity into the middle market is becoming impacted and there’s just a higher level of risk.” Sharma also explained how his bank has witnessed an increase in average receivables by the Chinese client’s increase in a span of 10 to 15 days. “Our expectation right now in terms of the sheer demand that is coming through our pipelines is that this is a tipping point,” says Sharma.

Lastly, HSBC bank besides other major players of the SCF market expect their shift back to normal curve and are expecting a better and improved performance post COVID.


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