Businesses ring in the new year with renewed optimism - Weekly roundup: 14 January
by Ben Poole
Businesses ring in the new year with renewed optimism
There is a renewed sense of optimism among small and midsize business leaders in the US as they consider their business and economic prospects for the year ahead, according to JPMorganChase’s 2025 Business Leaders Outlook survey. Compared to a year ago, confidence in the US economy has jumped 12 percentage points to 55% among small business owners and more than doubled from 31% to 65% among midsize business leaders. This upbeat attitude extends to their own companies, with three-quarters of respondents expressing a positive outlook for the next 12 months.
Recession fears have eased, with 69% of small and 71% of midsize businesses either uncertain about or not expecting one in 2025. However, inflation remains a top concern as most small business owners are seeing an increase in business expenses, and more than three-quarters of midsize business leaders feel costs are rising.
Today, the majority of leaders say they are feeling positive about the local economy - 60% of small and 59% of midsize businesses express confidence - but the global outlook is more tempered, reflecting uncertainty around shifts in global trading patterns, potential tariff impacts and geopolitical tensions.
When identifying challenges for 2025, midsize businesses point to international tariffs (19%), US competition (18%) and concerns about China’s trade policies (17%, up eight percentage points from last year). Still, nearly half (46%) plan to expand into new geographies in the next 12 months as they seek growth.
Some 40% of small businesses and close to half of midsize businesses (46%) say labour shortages, retention and recruiting are significant challenges. Many are considering tactics like increasing wages, offering flexible hours or increasing benefits to address these issues.
Buoyed by rising optimism, businesses are bullish when it comes to their companies’ performance projections for 2025. Among small business respondents, two-thirds predict higher profits (67%) and sales (66%), while half (51%) plan to increase spending. The majority (64%) plan to invest more to support sales by adding products (35%), funding more advertising (34%) and increasing social media campaigns (31%), among other strategies.
Small businesses are also investing in technology to fuel digital transformation. Notably, 48% plan to add artificial intelligence (AI) applications to their business in the coming year. While nearly 80% of small business leaders say they are either implementing, already using or considering adopting AI, about half (46%) express concern about its potential impact on business.
Midsize businesses are similarly looking forward to stronger results in 2025. Nearly three-in-four (74%) expect revenues/sales to increase, up 13 percentage points from a year ago. Around two-thirds (65%) anticipate higher profits, up 10 percentage points. Half (51%) plan to add headcount, up seven percentage points, while 38% are forecasting higher capital expenditures.
To help drive this growth, slightly more than half of midsize businesses (53%) plan to launch new products and services, and 43% expect to engage in strategic partnerships and/or investments.
US corporates rush to bond markets amid treasury yield worries - Reuters
US corporations kicked off 2025 with a fundraising blitz in the investment-grade bond market, aiming to secure favourable terms before further increases in Treasury yields inflate borrowing costs, according to Reuters.com. On Monday, 6 January, 22 companies had launched new bond offerings, raising the number of borrowers to 34 in the year’s opening days, Reuters reported.
Reporter Matt Tracy noted that syndicate bankers forecast nearly $65bn in bond issuance during the first week of the year, with January’s total potentially reaching as much as $200 bn. The activity reflects sustained momentum after a record-breaking 2024 when investment-grade companies raised $1.52 trillion - 26% higher than 2023’s $1.21 trillion - according to Informa Global Markets data.
The scramble to issue bonds comes as companies aim to capitalise on credit spreads that remain near historic lows. The ICE BofA Corporate Index showed spreads at 83 basis points on Friday, 3 January, just above the record tight levels seen on 30 November 2024. Narrow spreads, combined with rising Treasury yields, have created a shrinking window for cost-efficient borrowing.
The surge in bond issuance mirrors trends from 2024 when companies rushed to lock in low borrowing costs ahead of expected monetary tightening. This year’s early activity suggests that corporate treasurers are maintaining a proactive approach, securing funding before market conditions potentially worsen.
Japan’s economy holds new promise for foreign investors
Japan offers foreign investors fresh opportunities, as well as a model of diversification and resilience for other countries, writes Jared Cohen, co-head of the Goldman Sachs Global Institute, in an opinion piece on the bank’s website.
With the rise of artificial intelligence and technological competition with Beijing, Tokyo has made the revitalisation of its semiconductor market a national project, investing significantly more in chips as a per cent of GDP than the US, Germany, or France. Japan’s global economic footprint is growing, as shown by expanding trade ties to the Middle East, with members of the Gulf Cooperation Council exploring new commercial opportunities and investment theses in Japan beyond the traditional energy sector.
Cohen notes Japan’s approach to its rare-earths sector as an example of resilience in economic policy. In 2010, China embargoed rare-earth exports to Japan. Tokyo responded with an innovative approach, launching new mining and refining partnerships, finding new buyers, and working with countries in like-minded markets, including Australia, to diversify its supply chains.
Japan is the US’ sixth-largest trading partner and the top source of foreign direct investment. Meanwhile, domestic reforms, targeted industrial policy, and shifting trade flows are driving international investors’ interest in Japan, which has stated its goal to double foreign direct investment stock by 2030. With stronger economic prospects, Goldman Sachs Research estimates that the risk of ultra-low inflation in Japan has abated and that its growth in 2025 and 2026 is expected to outpace that of the euro area. “The result of these shifts is that Japan is becoming one of the most interesting markets in the world,” Cohen writes.
Equity funds enjoyed £27bn record inflows in 2024 - Calastone
December crowned a record year for fund inflows, according to the latest Fund Flow Index from global funds network Calastone. Equity funds were the clear winners. Investors added a net £27.22bn to their holdings in 2024, easily exceeding the previous record of £19.83bn set in 2021. Moreover, seven of the best months for equity funds on Calastone’s 10-year record were also in 2024. The year finished strongly, too – investors added a net £2.91bn to equity funds in December despite volatile stock markets around the world.
Global equity funds were easily the favourite fund sector for the ninth year in a row, absorbing £19.52bn of new capital, but investor sentiment changed most dramatically in favour of funds investing in North American equities. These saw net inflows of £11.90bn, up from just £5m in 2023. More than half of the inflows took place in the first quarter of 2024. The final quarter was the weakest, with inflows dwindling to £421m in December, though even this was still a strong month by the standards of the last 10 years. European equity funds also had a record year, with net inflows of £3.21bn, mostly in the first half of 2024. Emerging market funds were in vogue for 2024, too, with their second-best year on Calastone’s record.
UK-focused equity funds, by contrast, had another disappointing year. The £9.56bn outflow was smaller than in 2023 (-£12.07bn) but set against the huge inflows to equity funds overall during the year, it was the worst relative performance seen by the unloved UK-equity sector. December’s net selling of £221m was, however, the least bad outflow since May 2021 (if we disregard the small inflow in November that related to post-budget profit-taking and reinvestment).
Elsewhere, Asia-Pacific also remained out of favour, suffering the worst outflows on Calastone’s record (-£1.80bn). Funds investing in Greater China (which includes Hong Kong and Taiwan) also saw outflows. Japanese equities bucked the trend, as investors added a record £1.59bn to the sector.
2024 was a big year for passive equity funds. Investors committed £29.65bn to the index trackers, more than in the previous four years combined, and withdrew £2.43bn from their actively managed counterparts. The difference in investor appetite for the two strategies was easily the largest on Calastone’s record.
Across other asset classes, inflows were more modest. Fixed income funds saw inflows plummet to £1.29bn in 2024 after moderate inflows early in the year turned to outflows during the summer as the bond market rally reversed. The resulting surge in yields (which pushes down bond prices) tempted investors back into the market in the final quarter however. Flexible bond funds, which can invest across the fixed income universe, were especially unpopular, with outflows of £3.35bn over 2024. Meanwhile, corporate bond funds easily garnered the largest share of new cash from investors in fixed income (+£1.99bn). High-yield bond funds also did well.
Weakness in the bond markets helped money market funds – traditionally a safe-haven sector that shows minimal volatility. They had their best year on Calastone’s record, with £1.86bn of inflows. Mixed asset funds also enjoyed their best year since 2021, enjoying inflows of £14.6bn.
Europe sees first end-to-end Wero e-commerce payment transaction
The European Payments Initiative (EPI) has announced the successful completion of its first end-to-end Wero e-commerce payment transaction. The execution of the proof of concept (POC) transaction on the online store of 1. FC Kaiserslautern was made possible by the involvement of EPI, Atruvia, DZ BANK, its subsidiary VR Payment, along with the two pilot banks VR Bank RheinAhrEifel eG and VR Bank Südliche Weinstraße-Wasgau eG. This POC is an important milestone to the Wero roadmap and paves the way for the e-commerce use case market launch starting in summer 2025.
Between the end of November and mid-December, several transactions were successfully carried out on the online store of 1. FC Kaiserslautern as part of the POC. This first step ensures the smooth integration of Wero into the online platform of the merchant (1. FC Kaiserslautern) and its acquiring partner (VR Payments) as well as in the online banking app (VR Bank RheinAhrEifel eG and VR Bank Südliche Weinstraße-Wasgau eG) of the end-customers.
Further trials will be conducted throughout the first half of the year, before the official launch starting at the beginning in Germany over the summer. Belgium will follow in the fall and France at the beginning of 2026.
Wero will allow consumers to pay at e-commerce merchants directly with their bank account - without any intermediary or additional payment means. The e-commerce solution will cover standard payment use cases such as one-off payments and refunds and will add more complex payment models over time. This seamless and secure account-to-account payment method ensures the highest standards of data protection and fraud detection to protect consumers fully. Merchants will enjoy a simple deployment via their usual acquirers, such as VR Payment, in this case), a seamless user experience and a competitive pricing policy compared to usual payment schemes.
Retailers from and operating in all three Wero pioneer countries (Germany, France and Belgium) will be able to use the solution and offer it to their consumers, following the roll-out calendar established in each country. The Netherlands and Luxembourg will follow in a subsequent step.
Mastercard and Lloyds Bank spearhead CFIT’s strategic industry partners for 2025
The UK’s Centre for Finance, Innovation and Technology (CFIT) has struck an agreement with key industry partners that will see blue-chip financial institutions partner and fund CFIT’s next industry-led coalition, which will be launched in Q1 2025. CFIT said this backing demonstrates the appetite within the financial services sector to advance industry solutions and help deliver on the government’s mission of driving economic growth through financial innovation.
With the strategic support of both industry and government, and its second coalition on tackling Economic Crime through a Company Digital ID approaching its conclusion, CFIT is now preparing to launch a combination of exploratory and follow-on coalitions throughout the year.
These coalitions will continue CFIT’s approach of reaching out across the ecosystem, driving change and innovation in financial services and delivering better outcomes for SMEs and consumers. Each coalition will generate impact and value-based proofs of concept and propositions that can accelerate innovation and customer adoption.
The next of these coalitions will be led by industry partners, including Mastercard and Lloyds Bank, with other organisations set to join in 2025. The coalition will build on the success of CFIT’s Open Finance coalition and SME Finance Taskforce by developing the technology, policy and regulatory solutions to help the UK’s 5.6 million small businesses raise external finance more readily, successfully and efficiently.
The coalition plans include developing SME focused solutions, such as an SME digital finance education tool and a digital marketplace. It will also build on CFIT’s prior work to boost the supply of SME lending by developing further supply-side proofs of concept, such as an SME resilience index that enables lenders and other financial service providers to make more informed decisions.
RTP network payment value jumped 94% in 2024
More businesses and consumers than ever before benefited from real-time payments on the RTP network in 2024, according to its operator, The Clearing House. In 2024, payment value on the network jumped 94% from the previous year, logging in at $246bn, while volume surged 38% to 343 million transactions. Additionally, the network heads into 2025 having experienced a record 98 million transactions valued at $80bn in Q4 2024, representing 12% volume growth and a 16% increase in value from Q3.
The growing number of participating banks and credit unions is a factor that contributes to increased activity on the RTP network. The number of participating financial institutions (FIs) on the RTP network grew 67% in 2024, as financial institutions, particularly smaller FIs, see instant payments as a positive influence on customer retention and a way to reclaim payment flows and keep funds in their customer’s bank accounts, according to a soon to be released study from PYMNTS.com. The study also found that two-thirds of credit unions and smaller banks see instant payments as a way to increase customer satisfaction.
More than 285,000 businesses, through financial institutions on the system, are using the RTP network each month for B2B transactions, including supply chain payments, bill pay, and merchant settlement. These transactions helped increase the average transaction value by 40%. In 2024, the average payment value was $719, up from $514 in 2023. On 9 February this year, the individual transaction limit will increase to $10m. The new limit supports growth on the network in areas including real estate, cash concentration, and business-to-business transactions that require larger transaction amounts.
The RTP network now averages over 1 million payments per day, with 74% of days in December 2024 at or over 1 million transactions.
Treasury4 launches payments module
Treasury4, an enterprise treasury software platform, has announced the launch of its Payments4 module, which is tailored to the requirements of treasury and finance teams.
Part of Treasury4’s TMS, Payments4 consolidates payment operations into a single platform in a way designed to provide teams with enhanced control, real-time tracking, automated workflows and greater transparency at every step of the payment operations process.
The module aims to be a unified source of truth for payment management that enhances cross-departmental collaboration across the enterprise while maintaining high security standards that make treasury operations more transparent, efficient, and manageable.
As a cloud-based, API-first solution, Payments4 is a scalable platform that is designed to adapt to evolving business demands, from managing domestic wire transfers to navigating complex cross-border payments. Additionally, every payment integrates with the treasurer’s cash position, offering teams real-time visibility of funds in transit to support sound liquidity decisions.
Visa and Qashio to invest AED100m on B2B travel payments
Qashio has announced a strategic partnership with Visa to launch the Visa Commercial Choice Travel programme for the first time in the MENA region. With this B2B travel payments solution launch, the two firms aim to support the travel industry in the UAE, MENA, Europe and the UK with global issuance capabilities by allocating over AED100m in the programme in the coming years.
The travel solution will allow travel companies to obtain Qashio cards and transact in different currencies including AED, SAR, USD, EUR and GBP issued from UAE enabling payments & settlements in multiple currencies.
The specialised solution is designed to enable travel companies to digitise and automate their payments within the travel sector, optimising their reconciliation and enhancing liquidity. The solution is integrated with global travel management companies and their booking tools including Global Distribution Systems (GDS), making travel booking and payments seamless and secure.
Standard Chartered granted Luxembourg licence for digital asset custody services
Standard Chartered has announced the opening of a new entity in Luxembourg, to act as its European Union (EU) regulatory entry point for the provision of crypto and digital asset custody services to EU clients, following implementation of the Markets in Crypto Assets (MiCA) Regulation.
The opening of the business in Luxembourg is part of Standard Chartered’s global digital asset strategy, enabling broadening of its digital asset portfolio. This follows the recent launch of digital asset custody services in the UAE, with Luxembourg having a well-balanced regulatory and financial environment in order to meet growing client demand in the EU.
Standard Chartered has appointed Laurent Marochini as the CEO of the Luxembourg entity. Laurent joins from Société Générale where his last held position was Head of Innovation, and brings a wealth of experience to the role.
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