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BlackRock Launches Europe’s First Actively Managed Regulated Money Market ETF

BlackRock has introduced the iShares € Cash UCITS ETF (YCSH), a new actively managed ETF offering investors a way to manage their cash investments through a product designed to deliver money market-like returns.

According to BlackRock, the ETF combines the quality and liquidity of regulated money market funds (MMFs) with the convenience of the ETF format. Leveraging the expertise of its global cash management team, the fund actively manages cash in varying interest rate environments within a robust risk management framework.

As a key portfolio component, the fund provides access to highly rated short-term money market instruments, adhering to the stringent guidelines of the European Money Market Fund Regulation (MMFR), while offering clients the flexibility to meet their liquidity needs.

BlackRock highlights that extending MMF regulatory standards to the ETF ecosystem should enable a broader range of investors to actively manage their cash. “This product can be used to maximize the return on cash held in savings accounts, ETFs, or trading accounts, as well as by investors seeking a diversified cash investment tool as a complement or alternative to a standard bank account,” the firm stated.

The ETF allows individual investors, including those using digital investment platforms, to earn income through high credit-quality securities without minimum holding periods, and with investments starting from as little as €1.

“The YCSH combines the flexibility and accessibility of the ETF format, including continuous pricing and the ability to trade throughout the day, with the security of money market fund regulation. It’s an innovative solution for investors looking to get more out of their cash. This year, Europeans have shown significant interest in income investments, and YCSH expands the available options without requiring a fixed investment period,” said Jane Sloan, Head of Global Product Solutions for EMEA at BlackRock.

A dedicated team of money market portfolio managers will actively adjust the fund’s duration, credit exposures, and liquidity profiles to minimize volatility and ensure issuer diversification.

Beccy Milchem, Global Head of Cash Distribution and Head of International Cash Management, added: “Cash plays a critical role in a balanced investment strategy. We are pleased to bring BlackRock’s extensive expertise in active cash management to a wider range of investors through the convenience of ETFs. The demand for money market funds has grown in today’s high-interest-rate environment as investors look to actively manage their cash positions.”

With $849 billion in global assets under management in money market strategies, BlackRock International Cash Management ranks among the top three providers of MMFs. For nearly 50 years, BlackRock has delivered a variety of liquidity solutions tailored to the unique needs of each client across multiple interest rate cycles and market conditions.

This launch combines BlackRock’s leading expertise in cash management with the breadth and scale of the global leader in ETFs. The fund will be listed on Xetra with a total expense ratio (TER) of 0.10%.

Trump Nominates Paul Atkins as New SEC Chair, Advocating for “Common-Sense Regulations”

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U.S. President-elect Donald Trump has nominated Paul Atkins to serve as the new Chair of the Securities and Exchange Commission (SEC), effective January 20, 2025.

“Paul is a proven leader who advocates for common-sense regulations. He believes in the promise of strong and innovative capital markets that address the needs of investors while providing the capital necessary to make our economy the best in the world,” Trump said in a statement on Wednesday.

The president-elect, set to take office on January 20, also emphasized that the incoming SEC Chair “recognizes that digital assets and other innovations are crucial to making America greater than ever.”

Atkins previously served as one of the SEC commissioners, appointed by George W. Bush in 2002, a role he held until 2008.

He is currently the CEO of Patomak Global Partners, a strategic consulting firm for major financial clients that he founded in 2008 after leaving the SEC. At Patomak, he advises banks, trading firms, and fintech companies, among others.

Industry insiders anticipate that Atkins’ tenure will focus on deregulation, contrasting with the years under Gary Gensler, who was known for his rigorous enforcement of regulations.

The nominated SEC Chair has expressed support for digital assets, a stance that aligns with the immediate rise in Bitcoin’s value following Trump’s announcement. Within just an hour of the news, the cryptocurrency rose 1.25%, surpassing the $97,000 mark.

In Europe, From January to October, ETFs Attracted $207.79 Billion, Surpassing the 2021 Record

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According to the latest report from ETFGI, an independent research firm, the ETF market is on track to break all records, as demonstrated by October’s flows. During the first ten months of the year, ETFs captured $207.79 billion, surpassing the record set in 2021 with inflows of $193.46 billion. In terms of leadership, the Xtrackers S&P 500 Equal Weight UCITS ETF (DR) – 1C (XDEW GY) gathered $1.73 billion, the largest individual net inflow.

“The S&P 500 index fell by 0.91% in October but rose by 20.97% in 2024. The developed markets index, excluding the U.S., dropped by 5.22% in October but rose by 6.65% year-to-date in 2024. The Netherlands (-10.20%) and Portugal (-8.24%) recorded the largest declines among developed markets in October. The emerging markets index fell by 3.78% in October but rose by 14.93% year-over-year in 2024. Greece (-8.66%) and Poland (-8.18%) experienced the largest declines among emerging markets in October,” highlighted Deborah Fuhr, managing partner, founder, and owner of ETFGI.

Regarding the behavior of flows in October alone, the report indicates that $31.55 billion in inflows were recorded. By asset type, equity ETFs attracted $22.42 billion, bringing year-to-date inflows to $144.69 billion, significantly above the same figure for 2023. In the case of fixed income, ETFs attracted $6.18 billion in October, with year-to-date net inflows reaching $53.12 billion, “slightly above the $51.63 billion in year-to-date net inflows in 2023,” according to the report.

In the case of commodity ETFs, these recorded inflows of $385.46 million in October, bringing year-to-date net outflows to $4.51 billion, below the $4.79 billion in year-to-date net outflows in 2023. “Active ETFs attracted net inflows of $2.68 billion during the month, bringing year-to-date net inflows to $14.66 billion, above the $6.19 billion in year-to-date net inflows in 2023,” it highlights.

A significant fact is that, by the end of October, the European ETF sector comprised 3,109 products, 12,744 listings, and $2.22 trillion in assets. These $2.22 trillion came from 105 providers listed on 29 exchanges in 24 countries.

Bitcoin’s Highs Highlight Investors’ Main Concern: Crypto Asset Custody

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Cryptocurrency investors are ending the year with euphoria. Bitcoin began the week surpassing $98,000, edging closer to the pivotal $100,000 mark. According to experts, the decisive election of Donald Trump as the 47th president of the United States has reduced uncertainty, eliminating a major source of instability.

“As a result, one of the largest economies in the world, the United States, is now poised to implement liberal and crypto-friendly regulation, representing a significant step forward,” says Mireya Fernández, Country Lead for Bitpanda in Southern Europe and CEE.

Fernández highlights positive developments in recent years, including increased adoption of digital assets by retail investors, crypto market regulation in Europe, central bank interest rate cuts, and the integration of cryptocurrencies into traditional financial systems and banking portfolios. “The market is eager, and prices continue to trend upward. Bitcoin reaching $100,000 is not just a number but a genuine turning point for the crypto sector,” she adds.

Market Fundamentals

Manuel Villegas, Digital Asset Analyst at Julius Baer, notes that Bitcoin’s strong prices, currently hovering near $90,000, are backed by solid fundamentals. “Demand for spot products, positions in derivatives, and corporate intentions to add Bitcoin to treasury reserves are key factors shaping this scenario. While volatility is likely in the future, the current demand base is solid, suggesting this trend could persist. We see few significant short-term obstacles for Bitcoin,” says Villegas.

Custody Concerns

Bitcoin’s impressive performance underscores a key concern for investors, particularly institutional ones: custody. A survey by Nickel Digital Asset Management of institutional investors and wealth managers from the U.S., UK, Germany, Switzerland, Singapore, Brazil, and the UAE, managing a combined $800 billion in assets, found custody to be a bigger issue than volatility.

The survey asked participants to rank six barriers to investing in digital assets. The lack of centralized authority ranked as the second-largest barrier, followed by ESG issues and market manipulation risks. Regulatory uncertainty was ranked sixth and considered the least significant.

A notable 97% of respondents stated that backing from a major traditional financial institution is essential before considering investments in any digital asset fund or vehicle. Recent volatility has also encouraged skeptics: 19% strongly agree that price dislocations have presented solid opportunities for initial investments or increased allocations, with another 76% somewhat agreeing.

Anatoly Crachilov, CEO and Co-Founder of Nickel Digital, notes: “The industry has made significant progress in mitigating custody and counterparty risks through the adoption of off-exchange settlement solutions—an advanced form of digital asset custody—in recent years. However, this knowledge seems limited outside the native digital community. The close involvement and broad support of major traditional financial institutions are crucial for many investors, making the increased participation of BlackRock and Fidelity a very welcome development.”

New Developments

Investors are witnessing fresh advancements. According to Villegas, beyond expectations of regulatory and legislative improvements in the U.S., optimism has been fueled by Trump’s recent appointments, announcements of new agencies like the Department of Government Efficiency (DOGE), and corporate reserves. These factors, he says, have driven markets to “put their money where their mouth is,” with prices well-supported by spot demand.

On November 15, the Commodity Futures Trading Commission (CFTC) approved asset managers’ applications for options on some spot Bitcoin ETFs in the U.S., granting investors enhanced tools to hedge against directional risks or speculate further on Bitcoin’s price performance. “These derivatives should begin trading soon. Looking ahead, volatility is likely. Prices are high, and the market is relatively overextended, but with a strong demand base, this trend could continue. We see few significant short-term obstacles for Bitcoin,” concludes the Julius Baer analyst.

WisdomTree Launches a Physically-Backed XRP Cryptocurrency ETP

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WisdomTree, a global provider of financial products, has announced the launch of its latest cryptocurrency exchange-traded product (ETP). The WisdomTree Physical XRP ETP (XRPW) is listed on Deutsche Börse Xetra, the Swiss SIX Exchange, and the Euronext exchanges in Paris and Amsterdam with a management expense ratio of 0.50%, making it the lowest-cost ETP in Europe offering exposure to XRP.

The fund is designed to provide investors with a “simple, secure, and cost-efficient” way to gain exposure to the price of XRP. It is fully backed by XRP, “offering exposure to the spot price of XRP through an institutional-grade, physically backed structure.” Investors will also benefit from a dual custody model with regulated custodians and the underlying assets professionally secured in “cold storage.”

Regarding this cryptocurrency, the fund manager explains: “XRP is a native digital asset of the XRP Ledger (XRPL), a decentralized, permissionless, and open-source blockchain. XRPL uses a Proof-of-Association (PoA) consensus mechanism operated by universities, exchanges, businesses, and individuals to validate transactions. This system is more efficient than Proof-of-Work (PoW), as it requires less hardware resources and consumes less energy.

Created in 2012 specifically for payments, XRP can settle transactions on the ledger in 3-5 seconds and was designed to be a faster and more sustainable alternative to Bitcoin. XRP can be sent directly without a central intermediary, making it a convenient tool for bridging two different currencies quickly and efficiently. It is freely traded on the open market and is used in real-world applications to enable cross-border payments and microtransactions.”

Following this launch, Dovile Silenskyte, Head of Digital Asset Analysis at WisdomTree, suggests that with increasing risk appetite, exposure to altcoins like XRP could outperform a standard Bitcoin and Ether allocation. In her view, XRP can be considered alongside these megacaps in a multi-asset portfolio to reduce exposure to a single token. “Cryptocurrencies represent more than 1% of the market portfolio and should therefore be part of a comprehensive investment strategy. As an asset class with low correlation to traditional asset classes, cryptocurrencies can help increase diversification and potentially improve risk-adjusted returns in a multi-asset portfolio,” Silenskyte adds.

Meanwhile, Alexis Marinof, Head of Europe at WisdomTree, highlighted: “This new launch complements our existing range of physically backed cryptocurrency ETPs, offering investors another solution to enhance their multi-asset portfolios. Cryptocurrency ETPs are an effective way to keep investors within a regulated framework and are becoming the preferred vehicle for accessing cryptocurrencies. WisdomTree has 20 years of experience in providing and managing physically backed ETPs for institutional investors. With over $100 billion in assets under management globally across ETFs and ETPs, investors in our cryptocurrency ETPs can benefit from our global reach, scale, and resources.”

The Known, the Unknown, and the Unknowable Will Shape the Commodities Market in 2025

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The reelection of Donald Trump as president of the United States had a notable impact on commodities markets, with significant declines driven by a stronger dollar and investor repositioning. According to Marcus Garvey, Head of Commodities Strategy at Macquarie, uncertainty surrounding trade and tariff policies is affecting global growth projections. Additionally, inflation and geopolitical risk may continue to influence the prices of assets like gold and oil. “Supply and demand for commodities will remain heavily influenced by macroeconomic factors beyond specific policies,” Garvey notes.In its latest report, Macquarie suggests that the initial sell-off in commodities following Trump’s reelection was likely a knee-jerk reaction to the pronounced strength of the U.S. dollar. The Bloomberg Commodity Index (BCOM) closed the day down approximately 1%.Investor Positioning and Market Dynamics

Garvey highlights how investor positioning played a role in the market’s movements. For example, zinc, which had significant long positions, saw a nearly 5% decline, while Brent crude, heavily shorted, recovered somewhat to close with a loss of less than 1%. “Subsequent recovery aligned with a slight easing of the dollar and outperformance in the markets initially hit hardest,” he adds.While short-term commodity price fluctuations often move inversely to the strength of the dollar, Garvey stresses the importance of distinguishing between causation and correlation. “Exchange rate fluctuations alone are not definitive drivers of commodity price changes—note that the relationship between the dollar and commodity prices has been inverted for much of the past three years. The underlying macroeconomic factors are what truly matter,” he explains.Risks of Stagflation and Global Slowdown

Macquarie economists predict that the combination of higher tariffs, large and growing deficits (due to tax cuts), and reduced immigration (through deportation of undocumented immigrants) could likely slow growth and raise inflation, potentially leading to stagflation by late 2025.They also warn that a 60% tariff on all Chinese imports, combined with broader trade restrictions, could reduce China’s exports by 8 percentage points and its GDP by 2 percentage points by 2025.This global slowdown, they argue, would be bearish for overall commodity price trends, exacerbated by the bullish implications for the U.S. dollar. “While commodities are often considered an inflation hedge, this scenario—where inflation is not driven by strong demand growth or a negative commodity supply shock—would make it difficult for them to fulfill that role,” Macquarie argues.Policy Uncertainty and Commodity Sensitivity

Macquarie warns that the specifics and implementation mechanisms of tariffs remain unclear, as does the extent to which Chinese authorities may counteract their impact by boosting domestic demand. They point to corporate debt growth and monetary supply expansion as key signals to monitor for the effectiveness of monetary easing in China.In the U.S., the experts suggest that before Trump’s policies take effect, commodity prices will likely react to headlines. The high degree of uncertainty makes it exceptionally difficult for markets to price in a specific outcome. “This could amplify the impact of current favorable conditions—China’s initial monetary easing gaining traction in industrial activity, real wage growth in developed markets supporting consumption, and the strong performance of other risk assets—lifting prices in early 2025. The net effects on global growth will only become apparent afterward,” Macquarie economists add.Oil and Geopolitical Risks

Regarding oil, Macquarie sees Trump’s “drill, baby, drill” policy unlikely to significantly accelerate crude production but suggests it could marginally increase investor appetite for oil and gas.Given already high levels of activity—daily production has increased by 1 million barrels since 2019 and 2 million barrels since the 2020 pandemic lows—supply is expected to continue responding to prices rather than policies.However, geopolitical tensions under Trump’s second administration could result in supply-side surprises. “In both the Middle East and in relation to Russia’s invasion of Ukraine, scenarios exist where the currently discounted risk of supply disruptions could materialize,” the Macquarie economists warn.Gold: A Hedge Against Uncertainty

While gold’s geopolitical uncertainty boost tends to be short-lived, Macquarie identifies two key drivers that could push prices higher despite dollar strength. Chinese Investors: If Chinese investors use gold to hedge against currency devaluation risks, it could diminish the sensitivity of Western investors to the opportunity cost of holding a zero-yield asset with zero credit risk. Safe-Haven Appeal: Reduced sensitivity to these costs could solidify gold’s role as a crucial hedge in uncertain economic environments.
“Gold’s unique position as a zero-yield but zero-credit-risk asset is critical in this context,” Macquarie concludes.

Innovation, More Flexible Monetary Policy, and Increased Capital Investment Will Drive Economies and Markets in 2025

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“As we approach the end of the year and look towards 2025, the economic horizon presents a mix of opportunities and challenges.” With this phrase, JP Morgan Private Banking begins its outlook report. It highlights how advancements in artificial intelligence and innovation, along with more flexible global monetary policies and increased capital investment, could continue to drive economies and markets. “We believe that by adding diversification and generating income, clients can strengthen their portfolios to respond to an evolving economic environment. Our ultimate goal is to build resilient portfolios that not only align with our core market outlook but can also withstand various risk scenarios,” says Adam Tejpau, Chief Executive Officer, International Private Bank, JP Morgan.

The entity’s balance is clear: 2024 has been a year in which markets have performed exceptionally. According to their view, the year was characterized by a decrease in inflation, relaxation of monetary policy, and strong growth in GDP and corporate profits. Looking ahead to 2025, investors are ready to capitalize on this market strength.

In this regard, they believe that with new investment options, such as evergreen alternative funds, the acceleration of capital investment, and transformative topics like artificial intelligence, investors are poised to capitalize on emerging trends that could continue to drive the economy and markets. “Our ultimate goal is to build resilient portfolios through income generation and diversification, which can help mitigate the impact of unexpected disruptions,” says Grace Peters, Global Head of Investment Strategy at JP Morgan Private Banking.

To leverage the strong foundation created by market gains in 2024, their outlook report identifies five key themes. The first is the consideration that the global monetary policy relaxation should boost economic growth. According to their view, it is expected that the monetary policy easing cycle will continue next year, with declining interest rates supporting economic growth in the U.S. and the Eurozone, without significantly boosting demand or reigniting inflation.

“In the U.S., the bond market’s valuation implies a relaxation cycle ending in the first quarter of 2026, with the official interest rate near 3.5%. This provides a favorable environment for risk assets, benefiting sectors like housing, commercial real estate, and productivity, while also fostering an emerging revival of trading,” says Jacob Manoukian, Head of Investment Strategy for the U.S. at JP Morgan.

The second key theme identified is that capital investment is a megatrend driving the future. The entity believes that with high margins, growing profits, increased confidence from executives, and policymakers focused on supporting growth, companies and governments are ready to spend. Capital investment will be a major driver for three global trends: artificial intelligence, energy infrastructure, and security.

“We anticipate an increase in capital investment in the energy sector, driven by the reindustrialization of U.S. manufacturing capacity, the rise of electrification with clean energy solutions, and the growing demand for energy from data centers. This strong investment scenario is not limited to the U.S. Japan is at the forefront of many of these structural trends, and we see that, as a result, capital investment is increasing,” says Alex Wolf, Head of Investment Strategy for Asia at JP Morgan.

Third, the entity sees that European global giants offer resilience and profitability opportunities. According to Erik Wytenus, Head of Investment Strategy for JP Morgan Private Banking for Europe, the Middle East, and Africa, despite the productivity challenges Europe faces, investors should not overlook large European companies in 2025. “It’s important to remember that the 50 largest European companies earn approximately only 40% of their revenues from Europe, making these ‘national champions’ in this group true global players. While the ‘American exceptionalism’ has solid fundamentals, we also advocate for complementing U.S. positions with international diversification, including in Europe, which is benefiting from the monetary policy easing driven by the ECB,” argues Wytenus. For this expert, investors can continue to improve the resilience of their portfolios by considering real assets and income streams to better withstand unexpected disruptions.

Fourth, they emphasize that it will be crucial to take advantage of the frontiers of innovative investment in alternatives. “In the investment world, innovation sometimes comes in waves; we believe 2025 will see a surge in innovation as the sector explores new areas like evergreen alternative funds, sports, space, and urban development. Open-ended, indefinite-duration alternative funds (evergreen) are gaining popularity. In 2024, half of our commitments to alternatives will be in such structures, three times more than in 2023. These new strategies and investment opportunities, though not the core of portfolios, offer growth potential and diversification in a rapidly changing world,” adds Kennedy.

Finally, the entity considers it essential to focus on political impact over electoral outcomes. Following this year’s electoral results, which highlighted the power of anti-establishment movements, many investors are thinking about sovereign debt and deficits. However, investors’ attention should now shift from electoral outcomes to the impact of policies on the economic and investment landscape. “Latin America was at the forefront of the global monetary policy easing cycle, which has helped sustain growth and economic activity throughout the region. However, ‘fiscal activism’ from governments may unanchor inflation expectations and disrupt monetary efforts, posing a risk to the expansionary cycle,” comments Nur Cristiani, Head of Investment Strategy for JP Morgan in Latin America.

In Cristiani’s opinion, in the context of global changes in government power, investors must watch the risks posed by anti-establishment politicians. “Beyond right and left, the rise of anti-establishment parties could increase political and economic volatility, which strengthens the need for resilient investment portfolios,” he concludes.

Renewable Energies in Private Markets: Climate and Financial Gains

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To examine the perception of a trade-off between climate impact and returns in renewable energy investments, MSCI has analyzed the returns of private investments in the renewable electricity subindustry (renewables) compared to those in the drilling, exploration, production, and integration of oil and gas subindustries (oil and gas).

Although the two subindustry groups may differ in their operations, business models, and supply chains, a comparative analysis can provide insight into the investment appetite and relative robustness of the exit markets in both spaces.

In recent years, private fund exits from renewable energy investments have generated higher aggregated investment multiples (gross of fees) compared to exits in oil and gas. Looking at investment multiples, which compare total investments and total revenue at the ownership level, renewable exits surpassed those of oil and gas in each year from 2016 to 2023, up until the fourth quarter of 2023.

To incorporate the role of cash flow timing in returns, we analyzed the internal rate of return (IRR) (gross of fees) for both subindustry groups. Our findings suggest that the median IRRs for exits in renewables and oil and gas were largely aligned with the investment multiple results, further reinforcing the outstanding performance, up until the fourth quarter of 2023.

Therefore, the perception of a potential trade-off between climate impact and performance may not reflect the financial returns of renewable investment exits since 2016, making these assets more relevant to a broader range of energy investors, regardless of their climate focus. In MSCI‘s blog analysis from the third quarter of 2023, the relatively strong exit market for renewables in recent years was associated with an increase in net capital flows, providing the industry with the necessary capital to achieve the net-zero emissions goal.

FF Global Financial Services Fund: Reflection on the U.S. Elections

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The new Trump administration is likely to bring a variety of consequences for the financial services sector, both positive and negative. Some of these could be powerful catalysts that may favor short-term price movements, but it is important to be aware of the uncertainty surrounding the timeline and the magnitude of the effects, especially on profits.

The new government is expected to lower taxes, which generally serves as an economic stimulus. This will benefit various sectors, such as private equity and alternative investments, investment banks, regional banks, and retail investment intermediaries and platforms. Our portfolio has exposure to private equity and alternative investments through companies like Ares Management, Apollo Global Management, Hamilton Lane, Brookfield, TPG, Partners Group, and Intermediate Capital Group. We also hold Berkshire Hathaway and Investor AB, which are likely to benefit from stock market gains.

Among investment and regional banks, we hold positions in JP Morgan Chase, PNC Financial Services, Wintrust Financial, First Horizon, and BOK Financial. Within intermediaries and retail investment platforms, we hold positions in Interactive Brokers Group, Morgan Stanley (which is an investment bank but also owns E*Trade), and Raymond James. Swissquote is a European retail intermediary that offers various products, including cryptocurrencies (there is a perception that Trump will favor the cryptocurrency sector).

The new government is also expected to deregulate the financial sector. Companies like Visa and Wells Fargo (both in the portfolio) have several positive fundamental drivers but have faced considerable regulatory scrutiny in recent years, which could ease under a regime less focused on regulation. Laxer regulation could stimulate mergers and acquisitions activity, which in turn should create opportunities for private equity and investment banking.

These factors could stimulate investment flows into the U.S., which is often financed by the sale of non-U.S. assets, contributing to U.S. markets standing out. Regarding interest rates, if short-term rates decrease as the Federal Reserve continues its cycle of cuts, asset values should receive support, benefiting companies exposed to markets, including private equity funds, holdings, and investment platforms. As U.S. long-term rates rise, our positions in insurance and reinsurance should benefit.

A lot of attention has been paid to trade tariffs. If they increase, inflation could face upward pressure. This could lead to relatively higher interest rates, which would pose a hurdle for various sectors of the economy such as consumer goods, small businesses, and the real estate sector.

How Do They See the Economy, and What Concerns the CFOs of Large Companies?

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Corporate CFOs and treasurers are facing greater complexity compared to just three years ago, amid shifting economic and trade corridors, ongoing macroeconomic headwinds, and geopolitical risks.

While managing an international business is rarely straightforward, many companies remain optimistic about their growth prospects as new technologies enable them to uncover and map opportunities amidst uncertainty, according to the key findings of HSBC’s latest survey, the “Global Corporate Risk Management Survey.” The survey involved 300 CFOs and over 500 senior treasury professionals from multinational companies across various sectors in the Americas, Asia, and EMEA.

Reflecting on the survey results, Rahul Badhwar, Global Head of Corporate Sales for Markets & Securities Services, highlights that companies continue to face multiple challenges that could impact their finances. “Navigating interest rates, inflation, and volatile currency markets while implementing risk management strategies has become increasingly essential to corporate treasury functions. In a world of uncertainty, companies aim to mitigate risk while also benefiting from it,” he notes.

In this context, 68% of respondents agree that treasury plays a key role in strategic decision-making, up from 41% in 2021 when HSBC last conducted its corporate risk management survey. Additionally, 47% state that risk management is an area where their company feels less prepared. Respondents also acknowledge that the impact of inflation and economic policies has made revenue and cost projections inaccurate in some cases, with supply chain and sales logistics disruptions delaying cash flow timing. According to 93%, inaccuracies in cash flow forecast data have caused avoidable losses over the past two years, whether due to over-leveraging or liquidity deficits.

“There are times when the main driver of currency markets isn’t macroeconomics. This year, with a record number of countries heading to the polls, elections and geopolitics have sometimes been the dominant factors behind currency valuations. Unlike economic variables, geopolitical outcomes are even harder to predict, complicating corporate treasurers’ efforts to hedge foreign exchange risks and make long-term decisions,” Badhwar adds.

Key Risks

Notably, many companies are optimistic about growth prospects in the near future, according to the survey. Key drivers include rising customer demand and faster adoption of new technologies (both at 75%), as well as easing geopolitical tensions (52%). However, some challenges are likely to persist: 58% are concerned about inflation, and 55% fear a prolonged economic recession.

Holger Zeuner, Head of Thought Leadership, EMEA, Corporate Sales, observes that many treasury teams were caught off guard by the sharp rise in interest rates in 2022 and 2023 as central banks sought to curb runaway inflation, leading to higher financing costs. “Companies are looking to find a structural balance between fixed-rate and variable-rate debt to manage interest rate risks in alignment with their business profiles and market conditions. Such an approach could potentially help them better safeguard against worst-case scenarios while also allowing them to benefit when rates decline,” Zeuner explains.

HSBC’s survey also reveals that ESG risks in supply chains are becoming increasingly important for treasurers. A growing number of respondents expect to work with banks or other financial partners to support suppliers’ ESG efforts, but 27% also anticipate terminating contracts with suppliers over ESG issues in the next three years. “Building a reliable supplier relationship takes years, so ensuring you don’t have excessive concentration risk while maintaining a resilient supply chain can conflict with switching suppliers due to ESG scores. That’s the dilemma companies are evaluating, but the willingness of some firms to take steps toward greater accountability in supply chain practices is potentially encouraging from an ESG perspective,” notes Vivek Ramachandran, Head of Global Trade Solutions.

According to the survey, 99% of respondents are at least somewhat concerned about ESG visibility among their suppliers, while 56% are highly concerned about their ability to meet ESG reporting requirements—a sentiment more prevalent in Europe, where ESG regulation is more advanced than in other regions. However, HSBC’s survey indicates that only a third of companies globally have incorporated ESG guidelines and policies into their supply chains so far.

From HSBC’s perspective, AI is expected to provide significant advantages to companies and their treasury functions. 61% believe AI will positively impact their company’s profitability in the next three years, while another 61% see it as highly beneficial for risk management decision-making during the same period. However, 62% are concerned about a lack of access to talent and skills that could slow AI adoption, while only 5% view financing as the main challenge.