Southeast Asia gains momentum, and Cambodia rises as an emerging investment destination

Mergers and acquisitions activity in Asia slumps to decade-low, but Cambodia emerges as a promising frontier market

Mergers and acquisitions (M&A) activity in Asia experienced a significant decline in the first half of the year, reaching its lowest level in a decade. Reuters reported the total value of M&A deals dropped by 41 percent compared to the previous year, mainly due to higher interest rates, market volatility, and geopolitical tensions globally. 

In China, the decline was exacerbated by deteriorating Sino-U.S. relations and a slower-than-expected economic recovery. However, bankers are optimistic that dealmaking will pick up in the second half of the year. Dealmaking in Southeast Asia, driven by domestic consolidation in sectors such as financial institutions and technology, media, and telecommunications (TMT), is expected to gain momentum. 

Additionally, private equity firms are anticipated to become more active, as they currently have a record-high USD417 billion of deployable capital in the region. Strategic activity, asset sales, and take-private deals are also predicted to contribute to the increase in M&A activity.

Related: A vision for the region: Cambodian real estate poised for growth in 2023

According to IMI Daily there has been remarkable economic growth and potential of modern-day Cambodia in particular as a frontier market. Despite a tragic past, Cambodia’s economy has been experiencing continuous growth since the 1990s and has managed to avoid major recessions that affected the global economy. 

One of the factors contributing to Cambodia’s economic success is its robust tourism sector, with more than 5 million foreign tourists visiting the country each year. The presence of iconic attractions like Angkor Wat has made Cambodia a part of the established tourism trail in Southeast Asia. 

Unlike other frontier markets, Cambodia has the advantage of benefiting from foreign tourism, which helps stimulate its economy and move it closer to becoming an emerging market. Additionally, Cambodia’s demographics, including an average age of 25, increasing urbanisation, and a growing middle class, position the country for sustained growth in the future. These factors, along with Cambodia’s resilience to global economic fluctuations, make it an attractive investment opportunity for foreign investors.

The Property Report editors wrote this article. For more information, email: [email protected].