CEO mindset shift: renewed focus on strategic transactions as leaders acclimatize to volatility

• 47% of Singapore CEOs (global 57%) expect geopolitical and economic uncertainty to last well beyond a year – yet indicate growing confidence in their ability to navigate volatility 
• Localization and regionalization are increasingly viewed as a long-term strategic shift, with many already implementing changes to enhance operational efficiency 
• 48% (Singapore and global) plan to pursue M&A this year, with a strong appetite (Singapore 70%, global 73%) for joint ventures and strategic alliances; Singapore is top M&A destination among local respondents 

The latest EY-Parthenon CEO Outlook survey reveals that global CEOs are exhibiting resilience and confidence in their ability to navigate an economic landscape characterized by persistent volatility. 

Forty-seven percent of Singapore CEO respondents (global 57%) believe current geopolitical and economic uncertainty will last well beyond this year, with 22% (global 24%) believing it will last three years or more. Only one-fifth (Singapore 20%, global 19%) believe regulatory unpredictability will seriously derail their ambitions – a sign of growing resilience and confidence in steering their companies through a shifting global landscape. Understandably, the survey’s CEO Confidence Index – a measure from 1 to 100 that quantifies CEO sentiment globally across a wide range of business dimensions – came up strong, standing at 81.5 for Singapore respondents (global 83), up from 63 (global 76) since the previous survey in May. 

The survey data, which includes 40 respondents from Singapore, shows CEO resilience does not stem from confidence that current volatility will ease. Rather, the increase in confidence reflects leaders becoming acclimatized to uncertainty, rewiring operating models, embracing change and, by becoming more agile, finding new ways to thrive in spite of the shifting sands of the global economy. 

Learning to thrive amid ongoing uncertainty

One key takeaway from the latest survey is that CEO respondents are embracing change and transformation: 47% of Singapore respondents (global 52%) plan to increase their investments to accelerate portfolio transformation in the next 12 months, with a further 48% (global 39%) maintaining a level of transformation consistent with recent years. 

The survey indicates broad agreement that the shape of the global economy is shifting, with localization (such as producing goods in the country where they will be sold) and regionalization (such as creating regional supply chains to serve a particular bloc) gaining significant traction. Eighty-one percent of Singapore CEOs (global 72%) surveyed say they regard localization as a long-term strategic shift, with 65% (global 63%) echoing this sentiment for regionalization. This shift is largely driven by the need to adapt to changing market dynamics and customer expectations, allowing companies to respond more swiftly to local demands. 

This long-term strategic approach is reflected in respondents’ current plans for regional and local implementations: 33% of Singapore respondents (global 38%) say they have already completed localization plans, with a further 30% (global 36%) currently in the process of implementing. As well, six percent of Singapore respondents (global 21%) say they have completed regionalization plans, with a further 40% (global 35%) in mid-implementation. Most agree this is not a trend or a blip, but the result of significant change in the landscape forming a key part of their strategy over the long term. 

Purandar Rao, EY-Parthenon Asia East, Asean and Singapore Strategy and Transactions Leader says: 
“Today’s CEOs are not merely reacting to the challenges posed by market and policy volatility; they are using it as an opportunity to transform their businesses. The findings of our survey highlight a clear shift toward localization, as leaders seek to stabilize their operations, while evaluating opportunities that are being created by disruptions in global trade flows.” 

Joongshik Wang, EY-Parthenon Asean and Singapore Strategy and Execution Leader, adds: 
“The strong Singapore tilt toward localization contrasts against global respondents who appear to be more focused on regionalization. This may be due to Singapore’s role as a hub where local responsiveness in serving Southeast Asian markets is critical. As such, this may lead to a more conservative approach toward regionalization, where there can be more significant execution risks and regulatory uncertainty than in Singapore.” 

The latest edition of the study shows CEOs openly acknowledging the challenges they face, even as confidence in their ability to navigate challenges grows. Fifty-one percent of Singapore respondents (global 79%) agree inflation will remain a key operational headwind over the coming year, with tariffs also predicted to be a challenge by 48% of them (global 78%). Technology, a key driver of CEOs’ plans to transact this year, also presents challenges as well as opportunities. Thirty-eight percent of Singapore respondents (global 69%) believe cybersecurity threats are hampering their efforts to confidently innovate, while 58% (global 70%) say the primary obstacle to digital transformation is not technology itself, but the challenges caused by fragmented and inconsistent regulations across territories.  

M&A activity remains robust, with a notable shift toward strategic alliances

In good news for the M&A outlook, almost half of CEOs respondents (Singapore and global 48%) expect to pursue traditional mergers and acquisitions (M&A) deals. In further signs of inorganic growth activity, 70% (global 73%) anticipate engaging in joint ventures or strategic alliances. This reflects a preference for agile inorganic transformation strategies in a volatile environment, allowing companies to innovate and grow without the complexities of full acquisitions. 

Singapore CEOs view the local market as the top investment destination for planned M&A activity, followed by the UK and US. This aligns with the earlier sentiments on localization. Globally, the US continues to be the primary destination for planned M&A activity, followed by Canada, the UK, India and Germany. Notably, 32% of Singapore CEO respondents (global 41%) pursuing M&A are targeting companies for their technology or intellectual property (IP), underscoring the critical role of technological innovation in today’s competitive landscape. 

Geophin George, EY-Parthenon Asean Transactions and Corporate Finance Leader, says: 
“Improved CEO sentiment toward inorganic growth, be it through M&A or strategic alliance, is unsurprising, given the improved financial confidence, easing borrowing costs and strong availability of private capital.   The agenda is clearly focused on growth, localization and building innovation and technical capabilities to future proof the business.”  

To read the full report, please visit: https://www.ey.com/en_SG/ceo/ceo-outlook-global-report

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