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Goldman Sachs: Deal Activity Unfazed
16 Mar
Summary
- Middle East conflict rattles markets and triggers energy shock.
- Deal activity remains elevated, driven by strategic long-term logic.
- CEOs have recalibrated psychologically to operate through uncertainty.
The ongoing conflict in the Middle East has significantly impacted global portfolios, creating an energy shock reminiscent of the 2022 Russia-Ukraine crisis. Despite these global pressures, Goldman Sachs' senior international executives, Anthony Gutman and Kunal Shah, assert that market fundamentals remain robust. They observe that deal activity has not frozen, with European equity issuance reaching record volumes in recent weeks, including significant transactions from major corporations like EQT, Zurich Insurance, and Naturgy.
These M&A deals are fundamentally strategic, driven by long-term growth objectives and a growing emphasis on scale, a trend accelerated by AI. This corporate resilience is underpinned by a psychological recalibration among global CEOs, who have become more accustomed to operating through uncertainty following recent geopolitical events and economic turbulence. This increased tolerance for volatility means short-term instability is less likely to derail long-term strategic decisions.
Furthermore, Goldman Sachs economists have adjusted their inflation and growth forecasts upward and downward, respectively. They do not anticipate hawkish central bank responses unless the conflict prolongs or energy markets face sustained pressure. The firm views AI as a catalyst for M&A, not a deterrent, highlighting that deep enterprise relationships and regulatory protections offer significant moats against disruption. Goldman Sachs anticipates continued economic stability, not deep recessions, globally.
