Source: Bank Negara Malaysia
Crewstone anticipates that there will be a lack of credit availability for SMEs and privately held middle market companies that will begin to ramp up production for both essential and discretionary products and services. We are looking at providing liquidity to SMEs that have strong fundamentals, book orders and low gearing.
These target SMEs would have demonstrated resilience during the current economic challenges and are best positioned to thrive as the national and global economy recovers post-COVID-19. Additionally, there may be hidden gems among these companies that would be primed for an IPO in the next 2-3 years when global and domestic economic recovery moves at a higher momentum.
There has been a noticeable trend over the past two decades where banks been steadily moving away from financing businesses and gravitating towards consumer-related loans. This has made loan sourcing for most privately held middle market companies a challenging task.
With the current lack in market liquidity, further exacerbated by even lower interest rates, banks will be further reluctant to lend to businesses, particularly middle market companies. The looming global recession is expected to happen sometime this year, with many experts providing conflicting data and predictions on when the market would bottom out.