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With a recovery taking longer than expected to arrive, companies are focused on bottom-line improvement.
For the first time in two years, Southeast Asian respondents who had consistently taken a more bullish view of their local economies, expect the global economic pressures to dampen their growth prospects.
But it is not all bad news. Southeast Asian respondents continue to have confidence that their domestic economies will remain stable.
The respondents expect corporate earnings to be impacted by continuing uncertainties. The strong focus that Southeast Asian respondents have had on growth has now shifted to productivity improvements, cost reductions, protecting margins and efficient capital allocations.
Corporate balance sheets continue to be strong with low gearing levels that are expected to prevail for the next 12 months without much change.
Appetite for M&A has reduced despite strong balance sheets, availability of capital and good deal fundamentals. Overall there is a sense of conservatism that dominates boardroom decision making. With growth prospects moderating, one could expect to see leading companies paying a lot more attention to opportunities in their capital structures.
When the focus is on basic and stability, execution becomes key to success. While the economic fundamentals of the Southeast Asia markets have not changed, corporate sentiment has a significant bearing on the growth aspirations of our markets. At this time, corporate should focus on staying nimble and efficient while waiting for the right opportunities.
| ||Pip McCrostie |
Global Vice Chair,
| ||Harsha Basnayake |
Southeast Asia and Singapore Leader,
Transaction Advisory Services