Deal Activity Stays Strong, But Risk Pricing Becomes More Demanding

The first quarter of 2026 set a new record for global mergers and acquisitions, and that has given capital markets an unusually strong opening to the year. Reuters reported on 1 April that global M&A exceeded 1.2 trillion dollars, making it the strongest first quarter on record and a sign that companies are willing to act despite volatile macro conditions.​

But the headline figure conceals a more demanding market. The deal environment is being driven by several powerful but unstable themes at once: AI consolidation, energy transition investment, infrastructure expansion, balance-sheet repair and cross-border industrial repositioning. Each of these themes has its own economics, and each is now affected by the same backdrop of higher power costs, elevated inflation and geopolitical tension.

Asia-Pacific investment banking has benefited from this trend. Reuters Breakingviews noted earlier this year that the region’s fee pool had already recovered significantly and looked like it was entering a new phase of growth. Yet bankers are finding that the easy part is over. Clients now want transactions that solve multiple problems at once: how to secure AI capability, how to reduce energy exposure, how to improve regional supply chains and how to finance growth without overleveraging the balance sheet.

That is changing the role of advisers. The banker who can explain valuation, financing, regulatory approvals and geopolitical risk in one conversation is more useful than a specialist who only knows one sector. The same is true of capital markets more broadly, where issuance, M&A and private capital are increasingly interlinked.

There is also a visible shift in investor behavior. Foreign selling across Asia, coupled with the energy shock and more cautious rate expectations, means that underwriting and execution risk are rising. Deals can still be done, but pricing must reflect higher uncertainty, and more transactions will likely rely on careful structuring rather than simply paying a premium.

The long-term implication is that the strongest firms will be those with the best cross-sector intelligence. Capital markets in 2026 are no longer just about liquidity. They are about interpreting AI, energy, trade and policy as interconnected drivers of transaction value.