Having just returned from a trip to Singapore and Hong Kong to gloomy and grey London, the difference in mood is palpable.
In Britain the marks of recession are evident to even the most casual observer: it dominates the news, the high street, business, leisure and has even replaced the weather as the most common topic of conversation.
In Hong Kong and Singapore, however, the crisis has not been so all-pervasive – and compared to Europe, you could almost describe the mood as upbeat.
Conversations with GPs and LPs in the region seemed to bear this out: Yes, portfolio companies might not be in great shape; yes, leverage is harder to come by; yes, the crisis will probably instigate a fundamental change in the shape of the private equity industry in Asia; but, no, this is not the end of the world as we know it and actually, the medium term outlook for Asian private equity is a pretty good one, thank you very much.
While no one would hazard a guess as to how long the crisis might last, the consensus was that Asia is well-placed to emerge in fairly good shape, and it is a case of sitting out the bad times and waiting for valuations to drop.
Some investors, too, have bought into this mood of optimism.
A survey of 107 investors in private equity funds around the world put out by Coller Capital at the end of 2008 suggested the proportion of their private equity allocations dedicated to Asia was set to grow significantly in the next three years.
Anecdotal evidence from GPs in Asia already seems to support this. A couple of them commented that capital calls put out in the last couple of weeks had not even caused so much as a ripple of consternation among their LP base.
One Hong Kong-based GP even noted that a prominent US public pension fund currently reeling from its overall portfolio losses had gone as far as to tell him it would prioritise its Asian capital calls above all other private equity capital calls.
If some European and US investors’ hopes are pinned on Asia to come out of the crisis fastest and most intact, within Asia, many eyes are turning to China as the flag bearer for 2009.
Even with GDP growth estimates for China now as low as 4 percent to 6 percent, depending on who you talk to (Morgan Stanley this week cut back its 2009 China GDP growth forecast from 7.5 percent to 5.5 percent), several GPs say China is the key focus of their attention this year.
However, with demand for exports diving, domestic consumer confidence weakening, and the real estate market slowing, some fear China hasn’t yet felt the full force of the crisis. In fact, as they downgraded its GDP forecast, Morgan Stanley analysts said things for China would “get much worse before they get better in 2009”.
With this in mind, one can’t help but wonder whether the upbeat mood will be sustained in the Asian private equity markets this year.
As one China-based GP said to me recently: “People here remain far more optimistic. I hope their optimism will be justified.”
Jenny Blinch is the editor of sister title PEI Asia.