Even as trade and political tensions continue to roil economies in the Asia-Pacific region, the 19th edition of the Global Capital Confidence Barometer indicates that respondents are surprisingly resilient in their deal appetite. Conducted from August 2018 - September 2018, the biannual CCB shows that 45% of Asia-Pacific respondents, compared with 46% six months ago, intend to pursue M&A to fuel their growth ambitions over the next 12 months.
A majority (86%) of Asia-Pacific respondents expect the global M&A market to improve, with a significant proportion (78%) also expecting improvement in their local M&A market. Nevertheless, there is caution in their expectations given the significant trade tensions between the US and China, along with recent US interest rate rises, which are likely to impact liquidity in the Asian emerging markets. This need for caution is also evident in deal pipelines with 43% of respondents, a drop from 65% six months ago, expecting their deal pipeline to improve, although 50% do expect their deal pipeline to remain stable. Additionally, only 53%, compared with 68% six months ago, expect the number of deal completions to increase in the next 12 months.
The report finds that 76% of Asia-Pacific respondents anticipate seeing increased competition for acquisitions in the next 12 months, with 41% expecting competition from corporate investment funds and 38% from private equity. This trend is supported by the historic levels of Asia-Pacific focused dry powder, to the amount of US$379 billion, suggesting that funds are looking for more investment opportunities with deep pockets than ever before. This is also consistent with nearly a quarter (24%) of respondents identifying private equity as a major theme in the M&A market for the next 12 months.