Jan:Feb 2017 Credit Management magazine

NEWS IN BRIEF >
ARE COMMODITIES ON THE TURN?
IT'S early days yet, but commodities could
be turning the corner. OPEC is trying to
push oil prices towards $60, and might
well succeed, while metals (except copper)
and iron ore prices have firmed even
though inventories are still high. Many large
companies have cut back on investment,
so there will be few big projects coming on
stream in the next few years to increase
supply, and all seems set for a modest
rebound.
That could mean commodity exporting
economies like Russia and Brazil have turned
THINK of pasta and perhaps you think of
a Venetian canal with gondoliers, or a little
Tuscan hilltown restaurant. You probably don't
think of an industrial estate in Great Yarmouth.
But Pasta Foods is doing great export
business with its pasta and snack pellets
(the basic potato starch shape for making
cheesy, bacon, or pizza wotsits and other
thingummies).
I've been fascinated by some of the
trivia about its market. Low salt snacks, for
instance, sell particularly well in the Far East.
And the company claims to have the world's
biggest pasta machine. It now exports to more
than 40 countries, and while it started with the
snack pellets, it's now building up its pasta
exports as well.
Pasta Foods was one of the finalists in the
Open to Export awards, won by Lick Frozen
Yogurt – which has only been exporting just
over a year. Lick is now aiming for market
leadership in the Gulf Cooperation Council
and South-East Asia, and it's given itself just
three years to get there. That's ambition!
INTEREST RATES HEADING UP?
A snippet from the personal finance press
got me thinking this month. Apparently,
annuity rates rose 10 percent from August to
November 2016. You might think that's nice
for those about to retire – they'll get more for
their money – but it's also an indication that
bond markets are starting to come off the top,
and interest rates are rising.
Add to this the fact that the Fed has finally
hiked rates – and more importantly predicted
three further rises in 2017, more than
expected. That's already pushed the dollar up,
the corner. Good news too for Indonesia, for
the Gulf states, and for Nigeria.
But this silver lining has a cloud.
Countries which import their primary raw
materials and energy are going to see
inflation take off, and manufacturers will find
their feedstock costing them more.
So here's another uncertainty to add to
all the others. I rather wonder whether, with
all the world looking at Trump and Brexit and
the emergence of the 'alt-right', it's going to
be commodity prices that will turn out to be
the defining trend of 2017.
PASTA FROM YARMOUTH AND
LICKS FROM BRIGHTON
and driven gold prices and bond prices
down. True, the Fed has sometimes
threatened hikes that haven't actually
happened – but this time it does look as if the
upwards movement is happening for real.
If the Fed hike is followed by other
central banks, it will put the squeeze on
'zombie' companies everywhere. Watch out
for customers with big debts and high debt
service costs – they'll be the first to hurt. And
keep a close eye on your dollar rates in the
meantime.
INDIAN OIL
FINE Tubes headed out to Petrotech in New
Delhi in December, showing off its highperformance
products alongside US partner
Superior Tube. It's already got its regulatory
approval in place, and the trade exhibition
gives it a great place to strut its stuff.
But Fine Tubes isn't alone. More than 20 British
companies are participating, with Scottish
Development International in particular
making a strong showing. With Indian PM
Narendra Modi attending, and making a
commitment in his keynote speech to ‘replace
red tape with red carpet’ for foreign investors,
Petrotech has gained profile as a key way in to
a growing market.
FRANKFURT 1, LONDON 0
I'VE been waiting to see the dominoes fall
and I think this could be the first one: UBS
has decided to set up its European wealth
management headquarters in Frankfurt. A
deal London could have and perhaps should
have won – before Brexit.
While the Government talks about special
Brexit conditions for financial services,
without too many details, banks and
investment houses are voting with their feet.
Now UBS has made such a high-profile move,
I suspect there will be more. Keep an eye on
the city news to see what banks really think,
as opposed to what their analysts say they do.
CURRENCY UK
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The recognised standard
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