Singapore – CEOs are expressing increased optimism about their immediate prospects and the actions required to generate capital for future growth investments, despite a challenging market environment. According to the latest quarterly EY CEO Outlook Pulse survey, engaging more effectively with institutional investors and the government could expedite decarbonization and the creation of new revenue streams.

The survey, which included responses from 1,200 global executives and 300 institutional investors, including 40 CEOs in Singapore, highlights a positive outlook on company growth and profitability. Fifty-five percent of Singaporean CEOs (compared to 60% globally) are optimistic about revenue growth, and 48% (compared to 65% globally) are positive about business profitability. This optimism is buoyed by a generally favorable view of global economic growth (Singapore 43%, global 33%).

Technology and AI as Strategic Priorities

The survey indicates that investing in technology, including artificial intelligence (AI), to enhance growth and productivity is a top priority for 33% of Singapore respondents (global 47%) over the next 12 months. Enhancing data management and cybersecurity is also crucial (Singapore 33%, global 45%), as is investing in employee training and reskilling (Singapore 23%, global 15%).

“AI and generative AI (GenAI) are among the most significant emerging technologies impacting productivity and creativity,” said Vikram Chakravarty, EY Asean Strategy and Transactions Leader. “While it will take time to fully leverage AI’s opportunities, CEOs need to consider all aspects of AI, digital transformation, and cybersecurity to maximize business performance and growth.”

Positive Outlook on Mergers and Acquisitions

CEOs and institutional investors maintain a positive outlook on mergers and acquisitions (M&A). All surveyed CEOs in Singapore (global 99%) are looking to pursue transaction opportunities over the next 12 months, including IPOs, divestments, spin-offs (Singapore 63%, global 71%), joint ventures, and strategic alliances (Singapore 50%, global 48%). This signals a strong appetite for deals.

The survey identified the top strategic drivers for acquisitions as responding to changing customer behavior (Singapore 50%, global 30%), growing market share (Singapore 39%, global 33%), and accessing new geographies (Singapore 33%, global 32%). Acquiring technology and innovative startups was also a key consideration globally (Singapore 22%, global 40%).

“With the easing of inflation and interest rates, the time is ripe for M&A activities,” Chakravarty noted. “Companies looking to divest will be supported by increased appetite from large Singapore companies and private equity players.”

Sustainability Takes a Backseat

In a challenging economic environment, 58% of Singapore CEOs (global 23%) have deprioritized sustainability compared to 12 months ago. Economic and financial circumstances were cited as the main reasons (Singapore 43%, global 18%), followed by a shift in boardroom priorities (Singapore 15%). However, 23% of Singaporean CEOs (global 54%) reported that sustainability remains a higher boardroom priority today.

The survey found that technology and AI are seen as solutions to key sustainability challenges (Singapore 73%, global 75%). Concerns about greenwashing have led to “greenhushing” among companies (Singapore 71%, global 73%), and shareholders are reportedly more focused on earnings targets than long-term sustainability performance (Singapore 70%, global 73%).

“Sustainability has slipped as a business priority among CEOs,” Chakravarty said. “However, with regulations such as Singapore’s climate-related disclosures, business leaders must not lose sight of their decarbonization and sustainability strategies. Achieving sustainability targets is challenging but crucial for a shared commitment to a sustainable future.”

Globally, 35% of institutional investors have also deprioritized sustainability in their investment portfolios compared to 12 months ago, reflecting a broader shift in focus.