Risk rebound: When will Southeast Asia’s most promising markets lure back investors?
It’s unfair in many ways, but when crisis comes, investors abandon Southeast Asia. Emerging markets are seen as the riskiest portion of an investment portfolio, so when investors decide they need to reduce risk, they cut back in the region.
That has remained true in the face of the COVID-19 crisis, and the pullback has accelerated as the year wears on. Across Southeast Asia, dealmaking in the second quarter was down 39 percent, following a 26 percent contraction in the first quarter. In total, investment volumes declined 32 percent for the first six months of 2020, year-over-year.
Lack of demand, however, may not necessarily be to blame. Sellers have sometimes taken properties off the market, while buyers simply struggle to arrive.
“The sharp decline in deal activity in the second quarter is reflective of the lack of willing sellers, and the general uncertainty that exists around market recovery,” explains Regina Lim, head of capital-markets research at JL