A Singapore perspective
Seven in 10 of Singapore CEOs covered in the survey feel optimistic about the global outlook for the coming year. Yet, when it comes to addressing industry disruption, they do not consider themselves ahead of the curve in effectively handling the external forces at play.
Today’s business leaders are acutely aware of the prospects and risks associated with the disruptive forces shaping the commercial landscape. A combination of pragmatic optimism and a fear of being left behind is expected to drive investment and activity over the coming months. Singapore firms face greater pressure from global geopolitical challenges given their business exposure to jurisdictions around the world. At the same time, emerging technologies, such as generative AI, have brought the war for talent closer to their doorsteps. Hence, CEOs need to move from being reactive to proactive to get ahead and capitalize on the disruptive forces at play.
M&A outlook and concerns of CEOs
Most of the surveyed CEOs in Singapore are planning some form of transaction over the next 12 months — via M&A (48%), divestments or IPOs (40%), or a strategic partnership with a third party (33%).
Notably, intangibles such as technology, customers and brand names can become attractive M&A propositions in the information age today as they are value accretive without overloading the balance sheet. However, companies need to be mindful of the disconnect between portfolio and necessary M&A actions, the lack of effective metrics to measure how business units contribute to strategy and total shareholder return, and the difficulty in comparing against industry performance benchmarks for transactions involving intangibles.
At the same time, the top disruptive issue that will collectively shape CEO activity over the coming year is changing regulations. This is followed by the elevated cost of capital, changing customer needs, the altering global economic and geopolitical environment, access to talent, and emerging technology.
As Singapore is a trade-reliant economy, it is hardly surprising that evolving regulations is a top concern. Hence, any perceived tightening of regulations, especially those affecting cross-border trades, can have a material impact on Singapore enterprises. Therefore, scenario planning and supply chain risk management will be key. Changing customer needs is also concerning as customers today are constantly bombarded with information and choice, so companies need to continually innovate and differentiate themselves to remain appealing.
This section includes contributions from Sriram Changali, EY-Parthenon Asean Value Creation Leader and Andre Toh, EY Asean and Asia-Pacific Valuation, Modeling & Economics Leader.