1 minute read
Maso Capital
MANOJ JAIN
CO-CHIEF INVESTMENT OFFICER, MASO CAPITAL
When we look at the coming year, areas for us that are particularly interesting will continue to be merger activity. There will be a high amount of M&A in the Asia-Pacific region – in Australia, Japan, Hong Kong, China, Singapore, and even Asia to Europe. Asia to the US I think will be driven more by geopolitics, and particularly US-China relations. It depends on how they develop, but we do know that several situations or companies are looking at US assets. But again, they’re reluctant to move until the political climate eases.
What has surprised us in recent times is the speed of the recovery in confidence. That is reflected in increased merger and acquisition volumes, and in equity capital market volumes. That’s a positive, and that will continue. The next pick-up will be the opening of borders, which will lead to another surge in M&A volumes, because ultimately transactions are still being held up due to the inability to travel, although Zoom is helping.
A lot of what we do is ultimately linked to corporate confidence and investor confidence. There’s significant liquidity around, which is good for board confidence and funding of transactions.
We will see a large number of transactions, and we’re seeing bigger deals happening, which has surprised us positively. Deals are big, and they’re taking place, which is good.
What concerns us is geopolitical news – briefings and movements particularly in or around US-China relations. It can stop transactions from being announced, or when a deal is announced it trades with significant volatility. Now volatility isn’t necessarily bad, but it is something to be aware of.
Other concerns include closing risk, funding rates, and credit markets. As funding costs go up, board confidence on the margin comes down. As the world has started to normalise, and confidence has come back, companies have been rewarded for corporate activity which is good. As the world continues to function in a post-Covid environment, the biggest concern regarding Covid-19 has been the underlying earnings of a company.
