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Organic growth - EY - Korea

Korea Capital Confidence Barometer, April 2012

Organic Growth

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Intra-Asia-Pacific cross border activity as well as inter Asia-Pacific cross border activity 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 cross 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



Intra-Asia-Pacific cross border activity as well as inter Asia-Pacific cross border activity 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 cross 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, Phillipines)



The majority of Korean survey respondents are focused on organic growth.

Korean executives will focus on investing in products, research and development and hiring new talent to drive growth. Mergers and acquisitions are not on the agenda for most. The majority surveyed, 96%, don’t intend to pursue acquisitions in the next 12 months, a significant drop from 6 months ago (50%) and significantly lower than the global respondents result, 31%.

According to the Barometer, Korean companies, like their global counterparts are also cautious on several fronts. Despite being more confident about the global economic outlook than their global peers, Korean respondents are more subdued about credit availability, economic and employment growth, the regulatory environment and short term market volatility.

While a gap in valuation expectations is a primary reason why they do not expect to acquire or divest over the next 12 months, 64% of Korean executives expect M&A asset valuations to decrease over the next 12 months. Even with this in mind the majority are less disposed towards mergers and acquisitions and are more focused on reinvesting excess cash to deliver topline growth.



Pip McCrostie Pip McCrostie

Global Vice Chair,
Transaction Advisory
Services
Hong-Reol You Hong-Yeol Yoo

Korea Leader
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 over 1,500 executives surveyed in February and March 2012
  • 51 Korean respondents
  • Companies from 57 countries
  • Respondents from 40 sectors
  • 770 CEO, CFO and other C-level respondents


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