KUALA LUMPUR: Malaysia's deal making cycle is set to peak in 2019, with the value of both merger and acquisitions (M&A) and initial public offering (IPO) in Malaysia forecast to climb over the next two years, before easing back in 2020, according to the third edition of the Global Transactions Forecast, issued by Baker McKenzie and Malaysian member firm Wong & Partners.
Globally, the easing of key economic and political risks and the emergence of positive macroeconomic deal drivers will accelerate global deal activity in 2018, after a period of apprehension for global dealmakers earlier this year.
"After a few soft patches in 2017 we have a more optimistic outlook for the global economy and dealmaking in 2018, as long as the brakes are not put any further on global free trade. We see an uplift in both M&A and IPO activity as dealmakers and investors gain greater confidence in the business prospects of acquisition targets and newly-listed businesses," said Paul Rawlinson, Baker McKenzie's global chair in a statement.
"However it's not a done deal, with the threat of a Hard Brexit and a NAFTA collapse both still very real. Business will need to continue to make the case for liberal trade and investment frameworks."
Oxford Economics is expecting the gross domestic products growth (GDP) growth in Malaysia will increase to 5.6 per cent in 2017, 1.5 per cent faster than in 2016 on the back of increaswed government support for household spending, major government infrastructure investments and the solid outlook for world trade.
The forecast also predicts the number of M&A deals to rise to 390 in 2018, from 255 this year, with the value of these deals jumping from US$6.1 billion in 2017 to $13.1 billion in 2018, and US$15.2 billion in 2019.
Meanwhile, the value of Malaysian IPOs is set to peak at US$2.74 billion in 2019.
"While the forecast numbers prepared by Oxford Economics are quite bullish, we do see a definite pick up in interest around dealmaking in Malaysia, both domestically and by foreign investors. Macro-economic conditions are set to remain favourable, and Malaysia is well positioned at the heart of ASEAN,” said Brian Chia, Head of Corporate, Commercial & Securities at Wong & Partners.
Overall, Asia Pacific M&A activity is forecast to peak at US$754 billion and domestic IPOs at US$82 billion in 2019.