Asia’s new economic order is transforming deals – and there’s a place for Australia

Across Asia, the deal landscape is responding to disruptions; the general US geopolitical reset, tariffs and currency volatility, to name a few. All are feeding into an environment where localisation and intra-Asia reliance are increasing. And where restructuring is the new M&A.

This isn’t a bad thing – there are investment and growth opportunities for those who can understand the complex dynamics at play.

What does the US have to do with it?

In short, a lot. The White House’s reciprocal tariffs ranging from 10% to 50% (as at the latest announcements) are having a big impact on US engagement in Asia and companies that have US revenue or connection. This is affecting the valuation of those companies and the certainty of associated deals. Adding to the caution is the volatility of the US dollar, causing delays in exits and complicating return projections.

This is compounded by the emerging popularity of alternative currencies to the US dollar for deals in Asia, including the digital renminbi (or e-CNY as it’s known), in a trend set to grow.  Moreover, in its strategic plan for the next five years, ASEAN promotes the use of local currencies in deals.

The view from Singapore: Good opportunities for sophisticated bidders

On the ground from our KWM office in Singapore, we’re seeing a pipeline of opportunities for sophisticated bidders in a range of neighbouring markets. Key opportunities for acquirers include picking up assets from multinational corporates that can’t manage the complexities and taking the place of investors seeking a quieter approach to their portfolio in Asia.

Fund managers are hoovering assets, seizing opportunities in a trend the Singapore government is tuned into. Singapore has strengthened its private funds regime as part of efforts to grow the pool of professional services jobs. This includes tax concessions for Singapore-based fund managers to warehouse assets for companies.

The settings are working, with fund managers being established in real-time to acquire undervalued assets. To give one example, a recent co-investment deal in the real estate sector saw a global fund manager encourage an investor to accept a Singapore company as a vehicle.  

Stepping back, the overarching trend is one of restructuring. Private equity portfolios and strategics are splitting operations and looking for efficiencies.

The shift to localisation (with Singapore as concierge)

Deals are becoming more localised, as enthusiasm for cross-regional deals – once the bread and butter of private equity in Asia - dampens. Most countries across the region, including Indonesia, have softened foreign direct investment limits, opening valuable opportunities to buy into previously closed sectors, like the hotbed of activity that is digital infrastructure. 

There are exceptions, with data centre deals continue to trade at premium valuations and regional platforms achieving eye-watering exit multiples.

Otherwise, investors are faced with a patchwork scene, operating market-by-market instead of the old playbook that might see them stitch together interests across the region. They’re contending with disparate regulatory regimes and heightened scrutiny.

It’s a scene where every country ends up less connected than before. Singapore is key to navigating this regional network. The wide mix of people from across the region who now call Singapore home are playing an ambassadorial role, educating others on how to approach investments, leaning into their cultural knowledge. Long a regional hub, Singapore is adapting to its emerging role as concierge.

Intra-Asian reliance is stronger, with Japan and Korea leading the way

Connectivity between mature economies in the region is intensifying. Japan and Korea recently celebrated 60 years of diplomacy, with trade between the two growing to US$77 billion. These two leading ‘high-flying geese’ of Asia are once again showing a path to growth and resilience, working together closer than ever before.

What it means for Australia

Understanding the imperative in acting on the opportunities in our region is neither new nor a closely-held secret.

Two years have passed since Nicholas Moore AO’s Special Envoy for Southeast Asia delivered its strategic report, citing the stagnation in direct investment by Australia into the region despite the ‘potential to be a substantial investor’.

The data from the first half of 2025 indicates green shoots in both outbound M&A from Australia into Asia as well as Asian investors bringing capital into Australia. Japanese bidders led the charge in 2024 with big and small deals across a range of sectors, including the near A$10 billion take private of our ASX-listed client Altium by Renesas Corporation. That strong trend has continued into this year with our Japanese client Mitsui spending over US$5 billion buying into the Rhodes Ridge iron ore project.

We think Australian outbound M&A will move towards Asia in the near term.  Although this year’s headline outbound Aussie deals have played into the US, a range of corporates and bidders are heading to Asia to acquire real estate, infrastructure and energy assets.     

And then, of course, there is China. In July, some of Australia’s leading CEO’s met in China to talk trade and investment alongside Prime Minister Anthony Albanese. Watch this space, including the role of the renmimbi going forward.

The Asian M&A landscape is more fragmented than ever. Local rules, currency risks, and geopolitical tensions make regional scale harder to achieve. But for the agile investor, there is real opportunity. Sophistication, not scale, will define success.

It’s time to lean-in.

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