SEA businessmen positive about economy: poll
Many more of them are upbeat over the improving economic and job outlook in the region. But this optimism does not extend to the bottom line. Fewer appear confident over corporate earnings today compared with six months ago or even a year back.
The findings are in the latest EY Capital Confidence Barometer – a gauge of corporate confidence in the economic outlook.
About 60 per cent of 127 senior executives from large corporations polled in the region hold a brighter outlook of the global economy against 47 per cent six months ago. Some 48 per cent of them hold the same view about their respective local economies.
Their faith in the outlook is reflected in their hiring strategy. An overwhelming 91 per cent expect to keep their headcount or make new hires next year.
But the feel-good sentiment is not evenly spread across the countries in the region. For example, businesses in Malaysia and Indonesia are more pessimistic over economic prospects and expect a fall over the next six months.
The report pointed out that regional firms are shifting gears to a bolder corporate strategy from preserving capital to using cash to fund growth, largely through mergers and acquisitions.
“For over two years, companies have adopted more conservative strategies, where they focused primarily on cost containment and operational efficiencies. Then, growth was not a priority,” said Harsha Basnayake, EY’s managing partner for transaction advisory services, Asean.
That may no longer be the case. More than half or 55 per cent of those surveyed indicated that growth would be their primary focus over the next 12 months.
The appetite for deals is improving, with 41 per cent of corporates keen to pursue acquisitions in the next 12 months with a focus on bigger deals (US$51 million and above).
This is a marked change from six months ago, when only 25 per cent were looking to pursue M&As and even then, smaller deals. Respondents from Singapore and Thailand were most enthusiastic about M&A deals.
“This shift in sentiment is not unexpected. With growing inbound investment interest across Southeast Asian markets, there will be significant competitive advantage for those who recognise the consolidation opportunity and take action early,” said Harsha. “We are perhaps at the beginning of a shift in strategy.”