How Is Brexit Affecting Trade and Export Finance?

 

The Brexit vote will take another couple years to go into effect, but that doesn’t mean businesses can’t start anticipating the changes.

While the details of the Brexit deals’ impact on export finance aren’t clear yet, there are several areas that will likely be impacted in one way or another.

In this post, we’ll examine how the Brexit deal will impact future trade and export finance.

What Brexit Means for Export Finance

What Brexit Means for Export Finance

The world of United Kingdom export finance is currently up in the air, but there are key areas which will likely be affected. The changes will be contingent on the final trade agreements the UK makes with the European Union and other nations. Check out the list below to see what might change:

Lower Export Prices

Prices for exported goods could witness a drop.

Depending on the nature of the UK’s future trade deals, prices for exported goods could witness a drop.

If the UK continues to export to countries within the European Union, for example, producers might have to lower their prices to make their products more attractive to importers. Alternatively, if the UK enters into trade agreements with different countries, concerns regarding tariffs will be minimized.

Different Export Markets

The Brexit deal might end up changing what countries the UK does business with, depending on the final trade deals reached.

The UK already has access to expansive export markets located in United States, Canada, Japan, China, and the United Arab Emirates. This list could expand, however, if there’s enough global interest from free markets. In fact, the UK is currently promoting that idea with its “Exporting Is Great” campaign.

Many free market countries are already showing interest in entering into a UK trade deal, actually. The UK could leverage its strong ties with India, for example. Other interested countries include Australia and South Africa.

Pound Exchange Rates

Pound Currency

The impact on export finance and market access is clouded with uncertainty and primarily revolves around potential trade agreements made with the European Union. Exchange rates for the Pound, however, is a more cut and dry issue. Currently, the Pound is proving stable, though, as investors have accounted for the impact of Brexit talks.

Export Tariffs

Export tariffs will become an issue, but mainly for businesses that choose to continue doing business with the European Union as their leading market.

Obstacles in this area exist because the European Union will have to ensure its regulations are met while preserving its member’s benefits. This could translate into the previously mentioned lower prices.

Larger companies will be able to take that hit to their profits. Smaller companies, however, will likely have more trouble maintaining their profit margins.

Watching the News

The final outcome of the Brexit vote has yet to be seen.

The final outcome of the Brexit vote has yet to be seen. But don’t fret just yet. The result might actually be in your favor. To find the latest developments on this ongoing story, check out the Adam Smith Associates blog.

Adam Smith Associates At GTR Asia (Singapore)

Building on its reputation as the largest and most popular trade finance gathering anywhere in the world, the conference returned to Singapore on September 5-8 at Marina Bay Sands. With over 100 speakers, 45 exhibitors, 60 sponsors & partners the event provided an effective and impartial marketplace for all involved in trade, commodity and export finance.

Officially completing its 9th year, attendance exceeded the 900 plus delegates of 2016’s event and welcomed over 1,000 delegates, affirming that GTR Asia Trade & Treasury Week as the essential place to be for anyone involved in international trade and treasury.

Topics discussed include:

  • Protectionism vs multilateralism, realignment towards China, economic trends and scenarios
  • Trade finance gaps in 2017: The impact on trade, growth and jobs
  • The Belt & Road Initiative: The jewel in Asia’s crown?
  • Great expectations: How is the industry preparing for the era of fintech-enabled trade finance?
  • Trader perspectives on the commodity rebound and challenges in structured commodity finance ›› Country profiles: Vietnam, the Philippines, India, Bangladesh and Sri Lanka
  • Understanding potential threats to trade and economic stability in Asia
  • The role of insurers in managing and mitigating risk in uncertain times
  • Managing and financing Asia’s supply chains and the importance of working capital optimisation
  • Achieving sustainable trade: The challenges ahead
  • Are more investors accessing the trade finance market? What are they looking for?
  • ‘The business of treasury’: Operational challenges and the strategic environment

Mr Rudra Kundu, Managing Director was a panelist at the at the “Trade & Commodity Finance” stream from Adam Smith Associates Pvt Ltd.  Wherein the interview was conducted by Mr Rudra on topic

Are more investors accessing the trade finance market? What are they looking for?

Clement Schappler, Chief Risk Officer, EFA Group & Pankaj Kumar, Chief Executive Officer, Riqueza Capital were interviewed
by Rudra Kundu, Managing Director, Adam Smith Associates Pvt. Ltd.

● Examining the key factors in new kinds of investors looking at trade finance assets: How has this manifested itself in Asia? Is a different outlook required from that of traditional investment banking?
● What are investors looking for? Is it the type of yield or whether the asset is backed by insurance? Are we seeing more long-term interest? How difficult is it to get the right level of trade expertise?
● To what extent can supply chain finance play a role in handling investors and underwriting investments? To what degree have legal concerns been addressed?

Copper & Copper MCX Technical Analysis

Copper is now close to ending a 5 wave rise from the June low. So a correction could quickly set in. The RSI at 84.40 on the daily chart is a high reading. 3.02$ is the first support on the say down.

Copper MCX

Copper MCX prices are at the fag end of wave v of 3 and overbought. 3=1 is much higher but given the readings we need to be open to a unexpected price reaction. The MCX chart shows the upper end of the channel at 457 and lower end support near 433 and 20dma at 426. The most recent swing low is at 442, so a move below 442 could be the first sign of weakness.

Adam Smith Associates offers trade & commodity finance related services & solutions to its domestic and international clients. Views expressed in this article are purely of the author – Mr Rohit Srivastava – a leading technical analyst. Visit www.adamsmith.tv for services offered by Adam Smith Associates Pvt Ltd

Google – Where is it heading?

Google – or now better known as Alphabet, the stock has been in the long term 5th wave for a while. I would have liked to believe that it would be complete by now but as shown on this chart till the parallel channel support at 907 holds there is room for wave 5 of 5 up to 1050 to develop in the coming months

Adam Smith Associates offers trade & commodity finance related services & solutions to its domestic and international clients. Views expressed in this article are purely of the author – Mr Rohit Srivastava – a leading technical analyst. Visit www.adamsmith.tv for services offered by Adam Smith Associates Pvt Ltd

Commodity Technical Analysis

Aluninium MCX

Aluminium MCX prices attempted to go above 135 but have fallen back with a negative divergence on the RSI. The structure of the correction is probably more complex like an expanded flat, and we could see a dip to 129-128 range, the next support range.

Zinc MCX

Zinc prices achieved equality to the July July move. In doing so the last 6 days move is a 3 wave structure. So it is best classified as an expanded flat that can see a dip in wave c down to 191-90 as the next support zone.

GOLD

Gold is making higher tops and bottoms and the last swing low is at 1300 holding which the trend does not change. The only EW botheration is that all the moves up are overlapped. Yes it can eventually lead to multiple extentions and then we would be beyond 1500 in this move itself. But till we get a non overlapping leg watch the 1300 support as key, it is a little far, you may trail with the 20dma that is also at 1300 and rising. Last year when prices rose after a false break below the yellow neckline the overlapping move up failed to continue, lets hope that does not repeat as we get closer to the 2016 top at 1375.

SOY MEAL CBT

Soy Meal prices reached the lower end of a triangular support near 290 and started moving higher. Wave Z could be finally complete and wave 3 of larger degree could unfold for Soy prices after a long consolidation in wave 2. The upper end of the triangle is at 332 for a breakout.

Sugar NCDEX

Domestic sugar prices opened lower even as global sugar prices are showing signs of near term strength returning. However local prices have not followed global prices of late and therefore there is room to wait and watch the pattern in local prices which is still showing weakness ahead in wave C down.

Adam Smith Associates offers trade & commodity finance related services & solutions to its domestic and international clients. Views expressed in this article are purely of the author – Mr Rohit Srivastava – a leading technical analyst. Visit www.adamsmith.tv for services offered by Adam Smith Associates Pvt Ltd

 

Bank Nifty & Euro Technical Analysis

Bank Nifty

The hourly chart of the bank nifty futures this morning shows that mostly we will head to 24580 completing a triangle before we see lower prices.

Euro

Euro is bouncing back in minor wave b and wave c down should be next. Prices should go back to 1.166 or lower.

Adam Smith Associates offers trade & commodity finance related services & solutions to its domestic and international clients. Views expressed in this article are purely of the author – Mr Rohit Srivastava – a leading technical analyst. Visit www.adamsmith.tv for services offered by Adam Smith Associates Pvt Ltd

 

EURO, EURINR and USDINR Currency Technical Analysis

EURO

The Euro completed wave 3 up from the Jan 2017 bottom. Draw a trendline of the highs and project a reverse channel down for wave 4 potential. Wave 4 goes either to the wave 4 of lower degree near 1.166 or the lower end of the channel at 1.147 and rising. It can take up to a month to develop. Wave 4 can also be a time consuming triangle that does not go down as much but in a range till it touches the lower channel line that is rising.

EURINR

EURINR – Against my earlier count that wave 5 was complete it probably is doing that now. Prices have moved up in a channel and we maybe due for the first serious set back for the EURINR since it started the move up. This 5 wave rise should be wave 1 of a long term bull market and the coming correction wave 2 down. 23.6% retracement at 75 and 38.2% at 73.7 are the first two support levels to watch.

USDINR

USDINR retraced 61.8% in minor wave ii down at 63.85 and is finding support there. Holding this wave iii=i points to 64.60 next on the way up in what should develop as an impulse.

Adam Smith Associates offers trade & commodity finance related services & solutions to its domestic and international clients. Views expressed in this article are purely of the author – Mr Rohit Srivastava – a leading technical analyst. Visit www.adamsmith.tv for services offered by Adam Smith Associates Pvt Ltd

 

US 30 Years Treasury Bonds & NASDAQ Composite Technical Analysis

US 30 Years Treasury Bonds

US 30 year bonds are still within retracements limits for wave II up, so while there is no change in the wave counts or view, wave II has gone up to 78.6% and wave III remains far overdue to start. The third wave in bond yields would see big jump in US interest rates and rub off on other bond markets around the world as well.

NASDAQ COMPOSITE

The Nasdaq stopped at the 20dma resistance, however we cannot rule out a 61.8% retracement to 6355 before wave 3 down starts. Not necessary but possible.

Adam Smith Associates offers trade & commodity finance related services & solutions to its domestic and international clients. Views expressed in this article are purely of the author – Mr Rohit Srivastava – a leading technical analyst. Visit www.adamsmith.tv for services offered by Adam Smith Associates Pvt Ltd

Zinc, Crude and Corn Technical Analysis

ZINC MCX

Zinc daily momentum is in sell mode on daily charts. Prices paused near the 204 mark that can be a double top in wave 5. A move higher can mean that wave 5 is still extending. But till then we have made a near term peak that can result in a wave iv of 5 consolidation or a double top. Next support is at 191. A wave iv consolidation should not see us fall below 38.2% retracement near 193, so 193-191 are important supports, below which we could be in a larger decline or correction to the trend.

CRUDE MCX

Crude is forming a long term triangle in wave B. Wave E down is the final leg of the triangle and in it prices can test the lower trendline near 2750 before completing the pattern.

CORN CBT

Agro commodities are declining again in either wave Z or E on long term charts. I reworked Corn, to expect wave C of Z down. Wave B of Z retraced 66% and is a triangle and wave C=A goes down to 270. I was expecting a bottom near the 2009 low and we may test it once more near the 290 level.

Adam Smith Associates offers trade & commodity finance related services & solutions to its domestic and international clients. Views expressed in this article are purely of the author – Mr Rohit Srivastava – a leading technical analyst. Visit www.adamsmith.tv for services offered by Adam Smith Associates Pvt Ltd

 

 

Where are Gold & Silver heading? Technical Analysis

GOLD

A key reversal day in Gold, when prices open Gap up and then sell off to close lower. This at 78.6% near 1322, of the entire decline for the second half of 2016. Also at the upper end of the rising channel shown on the chart. This bar pattern is a classic and so this resistance is important for now. The lower end of the channel at 1288 is the next support and we may test that Below 1288 we consider it a larger reversal but till then the odds should favor the trend higher.

SILVER

Silver Mcx prices stalled at the upper end of the falling channel from the 2016 top. Unless we breakout above 40400 we are completing wave X and wave Z down for silver will be the last phase of this decline. While it is not mandatory that wave Z go to the lower end of the channel again as wave Z can truncate earlier, it is open to it. The averages near 38650 are the initial support zone, and the lower end is at 34570.

Adam Smith Associates offers trade & commodity finance related services & solutions to its domestic and international clients. Views expressed in this article are purely of the author – Mr Rohit Srivastava – a leading technical analyst. Visit www.adamsmith.tv for services offered by Adam Smith Associates Pvt Ltd