Australian Corporates Have ‘Mojo Back,’ Looking to Take on Risk

Australia’s chief financial officers “have their mojo back” and around half of them are willing to take more risk onto their balance sheets in order to capitalize on an economy increasingly showing a V-shaped recovery.

“Some 72% of the Australian CFOs that we surveyed are feeling optimistic or highly optimistic about the financial prospects of their companies,” Deloitte Access Economics said in a report released Monday. “An increased appetite for borrowing has been helped along by record low interest rates.”

The survey found most CFOs plan to pursue more deals this year with the with the focus “largely on acquisitions.” Expansion into “new geographies is a driver of acquisition plans for some CFOs, but for most the main drivers are growth opportunities in both existing and adjacent markets,” Deloitte said.

Australia’s ability to limit Covid-19 to isolated outbreaks has rapidly restored sentiment among households and businesses which, coupled with massive fiscal and monetary stimulus, is propelling a rebound. Unemployment has fallen more than a percentage point from its pandemic peak of 7.5%, and rising property prices and cashed up consumers are a potent mix for economic expansion.

The government has also softened its stance on joining the rest of the developed world in trying to combat greenhouse gas emissions, reflecting the new Biden administration’s retooling of U.S. policy.

“As many businesses move out of survival mode and are able to look forward to the future again, environmental, social and corporate governance and climate change are being viewed by most CFOs as important considerations for all aspects of doing business,” Deloitte said.

“Most CFOs recognize the potential for ESG including Climate Change to bring both greater risks and greater value creation over the longer term,” it said.

Deloitte found in the shorter term, CFOs are considering various opportunities to help accelerate their business’s recovery.

“The two recovery opportunities at the top of their lists are allowing for flexible working arrangements on an ongoing basis and increasing their use of technology and artificial intelligence,” it said.

©2021 Bloomberg L.P.

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