Seasonal change in the weather may be upon us but the global economic outlook seems not to be catching mother nature’s mood. Sluggishness is everywhere. The IMF has just lowered its 2013 growth forecasts for pretty much all the major economies. Latest news from Europe saw Portugal and Ireland get 7-year extensions on their bail-out loans, hard on the heels of the Cypriot banking crisis, the latter being instructive not nearly so much for its own potential financial impact as it was for the terms of its attempted resolution, with citizens of other stricken European economies left wondering about the security of their own bank deposits. China’s slower-than-expected growth was, at least in part and unsurprisingly, attributed to the slow growth in its European and American export markets. Meanwhile Japan has embarked on a wholly new strategy the potential effects of which have yet to be seen. Lastly, keen students of government and regulatory responses to the impact of the GFC were able to chalk up yet another exceptional measure as Ireland circumvented insolvency legislation to deal with the former Anglo Irish Bank, instead passing special legislation, the IBRC Act, to place it into liquidation and issuing a Special Liquidation Order, inter alia appointing KPMG partners as liquidators. Quite extraordinary; politicians, not courts or creditors, directly appointing insolvency office holders.
On the bright(-ish) side, the US economy is beginning to show some signs of new life. M&A activity is increasing and confidence seems to be returning. Increased M&A activity does, in our view, lead to an increase distressed opportunities as investors who are keen to tap into new opportunities, seek early exits from underperforming investments.
Closer to our home, Hong Kong is witnessing a strange paradigm in its economic progress with full employment and a strong property market existing alongside weak IPO and M&A markets. The lack of a buoyant IPO market is wearing increasingly heavily on international funds that invested in China opportunities, but are now having to consider alternative, non-IPO exit strategies.
So where are the opportunities, and what of Hong Kong and China? Embedded here are links to two recent KPMG publications. The first is our periodic Global Debt Sales publication, setting out the hot spots for sales of performing and non-performing loans around the globe. The second publication, is our outlook on the IPO market for Hong Kong in 2013. The report summarises the activity for 2012, and sets out the likely activity for 2013 as we enter the IPO season.