Corporate confidence is the highest it has been in the last five years despite recent turmoil in global markets, J.P. Morgan's top European investment banker said on Friday.
"I don't believe it's a fundamental change. The economy is not booming but it's not breaking down either," said Klaus Diederichs, head of European Investment Banking at the US bank. "There's no structural change and there is still a lot of liquidity in the market and corporate confidence is as high as I've seen it in the last five years."
Over the past month, fears over interest rate rises and global economic growth have caused a sharp sell-off in markets around the world as investors become increasingly risk averse.
In Europe, the FTSEurofirst 300 index has surrendered all of its gains for the year to date and is now around 10 percent below its near five-year high struck a month ago.
While some observers have said the declines could lead to a drop off in corporate activity, in particular mergers and acquisitions, Diederichs said the opposite was more likely.
"If anything they (corporations) see the market correction as an opportunity to do more (M&A) at decent prices," he said, adding that the ability to finance and raise capital for acquisitions had not changed.
His comments come as financial data provider Dealogic said global M&A hit a new record this week. Deal volume has topped $1.653 trillion this year, marking a 38 percent increase over last year and beating the previous year-to-date record of $1.649 trillion in 2000. A record of 25 deals had a value of $10 billion or greater so far this year, up from 15 deals last year, Dealogic said.
For sure, a steep or prolonged decline in the markets could put the brakes on deal making as companies' plump stock prices shrink, bankers have said. Stocks were used as part or sole currency in about 9 percent of the deals announced this year, Dealogic said.
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