KUCHING: Ernst & Young has released its bi-annual ‘Global Capital Confidence Barometer’ survey yesterday with a silver lining on Malaysia’s confidence despite the slightly pessimistic undertone from its Asian neighbours.
According to a press release, the survey of more than 1,500 senior executives in 41 countries around the world, of which 118 were from Southeast Asia (SEA), which was conducted in August and September 2012, expressed little confidence in the immediate prospects of global recovery despite Southeast Asia consistently holding a bullish view for two years.
More than half (54 per cent) of SEA respondents thought that the global economy was declining, up from 42 per cent who held such sentiments six months ago with Malaysian respondents providing a much better vote of confidence about the prospects of their local market as compared to others in the region.
Up to 42 per cent of those surveyed (Malaysian) expected to pursue acquisition opportunities within the next 12 months with a view to improving profitability and accessing new markets.
It was also stated that half of the Malaysian respondents also expected the number of deal opportunities to improve with closure rates increasing by 27 per cent compared with six months ago.
George Koshy, Transaction Advisory services leader for Malaysia at Ernst & Young shared, “What we are seeing is obviously a sense of caution that has dominated our markets. The results reflect the view that while most corporates see Southeast Asia as stabilising, capital allocation, productivity and efficiency are the biggest agendas across boardrooms including those in Malaysia.
“Over the next few months, the focus of these corporates will be to optimise their capital structures and reduce overall cost as they continue to be wary of changes within their own economies.”
Another 48 per cent of SEA and 73 per cent of Malaysian respondents respectively felt that revenue and margin pressure were the most significant business challenge facing their companies while growth and appetite for mergers and acquisitions took a backseat with focus on bottom-line improvement
According to the survey, about half of SEA respondents had placed greater emphasis on capital optimisation activities while reducing interest in investing capital. This was not surprising considering 48 per cent of the SEA respondents expect the continuing eurozone crisis to worsen revenue and margin pressures.