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S’pore CFOs see currency volatility as key risk

SINGAPORE- Currency volatility has emerged as the primary concern among chief financial officers (CFOs) in Singapore, according to the CFO Outlook Asia 2014 survey by Bank of America Merrill Lynch.

SINGAPORE- Currency volatility has emerged as the primary concern among chief financial officers (CFOs) in Singapore, according to the CFO Outlook Asia 2014 survey by Bank of America Merrill Lynch.

More than 600 CFOs and other senior financial executives in the region were covered in the survey, now into its third edition.

Five per cent of those surveyed are Singapore CFOs, and about two-thirds of these CFOs represent companies with annual revenues of US$1 billion (S$1.25 billion) and above.

Bank of America said that wider-than-usual swings in the Singapore dollar in recent years is a reason why 55 per cent of Singapore CFOs surveyed see currency volatility as a key risk.

Their other concerns include macroeconomic and regulatory risks.

The survey also found that despite labour and cost pressures, more Singapore CFOs are expecting profits to increase.

Meanwhile, 68 per cent are expecting to see profit growth this year, up from 65 per cent in 2013. At the same time, only 61 per cent expect revenue growth, down from 71 per cent a year ago.

Mr Gregory Seow, Bank of America Merrill Lynch’s head of corporate banking for Southeast Asia, said: “That’s a very interesting finding. I can ascribe it to three underlying reasons. The first is that Singapore is seen as a key beneficiary of stronger US growth.

“The second reason, on a macroeconomic front, the central bank has the credibility and the experience to manage cross-border foreign exchange volatility, and it cascades down to the corporates, which we survey on.

“The third point is that Singapore has a huge current account surplus, and that helps to buffer and cushion any unforeseen volatility.”

Channel NewsAsia

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