Skip to main navigation

China Capital Confidence Barometer - March 2012 - EY - China

China Capital Confidence Barometer, March 2012 - August 2012

A focus on stability

  • Share

Cross border activity in the Asia Pacific region is increasingly perceived as a barometer for the global community’s economic health.

In the 6th global survey, we found economic outlook, optimism, business health and willingness to divest or engage in M&A activity varied by market across Asia-Pacific.

Are markets pursuing growth or maintaining stability?

Singapore Indonesia Malaysia Mainland China South Korea Australasia
58% - pursuing growth 61% - pursuing growth 46% - pursuing growth 64% - maintaining stability 65% - pursuing growth 49% - maintaining stability



Cross border activity in the Asia Pacific region is increasingly perceived as a barometer for the global community’s economic health.

In the 6th global survey, we found economic outlook, optimism, business health and willingness to divest or engage in M&A activity varied by market across Asia-Pacific.

Companies are managing their capital differently from six months ago. What are most markets focusing on today?

  Southeast Asia Mainland China South Korea Australasia
October 2011 40% - investing capital 35% - preserving capital
35% – investing capital
52% - optimizing capital 30% - preserving capital
April 2012 36% - investing capital 44% - optimizing capital 68% - investing capital 31% - optimizing capital



(Note: we define markets in Southeast Asia to include: Singapore, Malaysia, Indonesia, Vietnam, Thailand, Cambodia/Laos, Philippines)



Chinese companies remain cash rich, free of the debt-refinancing concerns that still occupy many of their global peers. At the same time, they are more preoccupied with short-term stability in their local markets.

Our China Capital Confidence Barometer finds that despite a willingness to make opportunistic acquisitions when excess cash is available, Chinese respondents are most likely to favor stability over an increase in deal activity.

Chinese executives responding to our survey express a curious contradiction: on the one hand, they have an even more positive impression of the global economic environment; at the same time, they are less bullish about the climate for deal-making at home, where they are concentrating on cutting costs and maintaining their domestic market positions.

Chinese executives have been more worried than their peers about the potential impact of Eurozone instability on their businesses: in particular, about expectations that the Eurozone might expect support from China, and apprehensive that global political pressure might result in changes to currency policy. 

Worries about economic volatility are also likely, in part, to reflect the political focus of the last two months when the survey took place, a time that coincided with the annual meeting of the National People’s Congress, the last year for the outgoing leadership team.

Chinese executives are also facing up to the fact that their country’s economic prospects, while still bright, may be more limited than they had been previously.  Government statistics show a drop in gross domestic product growth in 2011 from 10% to 8%, and inflation continues to be a top government concern. 

Meanwhile, IPO markets remain slow after two quarters of weakness, and high prices are viewed as a major part of the problem.  Although valuations have come down somewhat in the past six months, more correction is needed before Chinese companies will rejoin the M&A bandwagon.




Pip McCrostie Pip McCrostie

Global Vice Chair,
Transaction Advisory
Services
Bob Partridge

Greater China Leader,
Transaction Advisory Services
Eleanor Wu

Partner,
Transaction Advisory
Services
Tony Tsang

Partner,
Transaction Advisory
Services
Bernard Poon

Partner,
Transaction Advisory
Services
   


About this survey

The Global Capital Confidence Barometer is a regular survey of senior executives from large companies around the world, conducted by the Economist Intelligence Unit (EIU). Our panel is comprised of select EY clients and contacts, and regular EIU contributors. This snapshot of our findings gauges corporate confidence in the economic outlook, and it identifies boardroom trends and practices in the way companies manage their capital agenda.



Profile of respondents
  • Panel of more than 1,500 executives surveyed in February and March 2012
  • Companies from 57 countries
  • Respondents from 40 sectors
  • 85 China respondents
  • 770 CEO, CFO and other C-level respondents
  • More than 400 companies would qualify for the Fortune 500 based on revenues


Next »

Back to top