Dr. Rebecca Harding CEO rh@equant-analytics.com Dr. Rebecca Harding CEO rh@equant- analytics.com An Economist s View of Global Trade Flows TXF, Trade and Treasury, Frankfurt, 12-13 November 2015
Trade has under- performed since 2011 And the relationship with GDP has broken down 4 Trade and GDP growth 2012-2016 (forecast) 3.5 3 2.5 2 1.5 1 0.5 0 2012 2013 2014 2015 2016 World trade growth GDP growth (volumes) Source:, World Bank
Trade finance not fuelling trade as it was And growing too slowly 60 50 40 30 20 10 0-10 - 20-30 - 40 Trade finance versus world trade growth, 2002-2016 (forecast) 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Total Trade Finance Total Trade Source:
Impacting commodity trade finance deals
And oil and gas deals in particular
But there are still opportunities Because values are still growing 7,000.00 6,000.00 5,000.00 4,000.00 3,000.00 2,000.00 1,000.00 - Total trade finance vs trade receivables, 2001-2016 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 200.00 180.00 160.00 140.00 120.00 100.00 80.00 60.00 40.00 20.00 - Total short, medium and long term Trade Finance World trade finance revenue pool Source:
Risks to trade finance Oil prices remain low World trade finance flows vs WTI oil last price monthly Monthly valueof total world tradefinance, $USbn 1600.0 1400.0 1200.0 1000.0 800.0 600.0 400.0 200.0 0.0 200106 200110 200202 200206 200210 200302 200306 200310 200402 200406 200410 200502 200506 200510 200602 200606 200610 200702 200706 200710 200802 200806 200810 200902 200906 200910 201002 201006 201010 201102 201106 201110 201202 201206 201210 201302 201306 201310 201402 201406 201410 201502 201506 201510 201602 201606 201610 160 140 120 100 80 60 40 20 0 World trade finance WTI oil
Risks to trade finance Fed raises interest rates Correlation of exports with currency value Thailand - 0.92 South Korea - 0.31 South Africa 0.13 Indonesia 0.34 Nigeria Mexico 0.68 0.67 Tutkey India 0.56 0.55 Russia 0.27 China - 0.94 Brazil - 0.60-1.20-1.00-0.80-0.60-0.40-0.20 0.00 0.20 0.40 0.60 0.80 Source:
Risks to trade finance 2016 is the year of geopolitics Source: Palladium Risk
Risks to trade finance Geopolitics: South China Seas Trade and trade finance between China and Japan, 2001-2016) Value of total trade or trade finance (USDbn) 400.00 350.00 300.00 250.00 200.00 150.00 100.00 50.00 180 160 140 120 100 80 60 40 20 0.00 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 0 China- Japan total Trade (USDbn) China- Japan total trade finance
Case study of Nigeria Risk perception and management 350 Geopolitical risk and trade finance in Nigeria 2001-2016 300 GPR vs Trade Finance index 250 200 150 100 50 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 Trade Finance GPR
Concluding remarks Risk can be managed Commodity prices look to remain low Trade finance and trade will not take off in 2016 but they will grow China is restructuring and reforming (retail sales and luxury imports remain strong) There is a perception that the world is riskier but: The reality on the ground is often business as usual There is a strong correlation between high risk and high trade finance growth in riskier countries Good data helps to mitigate some of the risks
About was founded by Dr. Rebecca Harding, a serial technology entrepreneur with 20 years of experience in technology, economics and big data management Equant provides the world s macroeconomic data, which is interpreted to market intelligence and integrated into investment decisions through a proprietary trading interface Whilst big data makes information readily available, there is a market gap for businesses which can offer information, intelligence and a tailored interface to their clients in one affordable packaged solution
Value Proposition Information Big macroeconomic data, financial market news and prices Cleaned, harmonised, and in local currency or USD on same platform Intelligence Real time nowcasts, indices and trading suggestions, economic interpretation Financial market and Economic data interpretation Economic fundamentals, financial data and indices; all in one place and at affordable prices Interface Links to trading platforms and tailored user- friendly graphic user interfaces Real time trading solutions linked to information and intelligence in real time
Process Macro- economic data Trade data Financial & market Intelligence Economic Intelligence & Insight Tailored Interface Financial Data Information: Big data amalgamation and cleaning Intelligence: Data Driven Interface: Tailored to investors, traders and analysts
approach to trade finance The lack of data in trade finance is a challenge to the sector has an unrivalled platform of the world s trade flow data covering 249 trading jurisdictions and 12,800 sectors Our trade finance flows are based on practitioner, market and documentary estimates They cover trade finance products and processes to provide one integrated dataset which can estimate trade finance market size by country, product and sector
How we apply this to risk Our work with Palladium Risk We work with our sister company Palladium Risk We estimate and forecast risk using a unique index created for each country globally This index is based on the products that countries import and that are proxies for geopolitical instability We correlate this index with trade finance and trade to derive scenario forecasts by country and sector
Contact Us Dr. Rebecca Harding rh@equant- analytics.com +44- (0)7803-710711 Palladium Risk Jack Harding jh@palldiumrisk.com +44- (0)7754-778892