JPMorgan's Hernandez Says Global Deal Size Will Keep Growing

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  • Head of global banking says world economy best since 2007
  • Privatization opportunities in the Middle East are ‘huge’

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JPMorgan Chase & Co.’s head of global banking, Carlos Hernandez, said companies are only just beginning to “test out the limits of what is possible” for new stock sales and deals, driven by the strength of the world economy.

“If economic fundamentals continue as they are now, next year the price of equities will continue to increase, the size of deals will continue to increase, and though interest rates are rising they are still benign on a historic basis,” Hernandez said in an interview in Dubai on Sunday. “The global economy is the best it’s been since 2007.”

Hernandez said that only a few years ago, deals over $100 billion weren’t considered possible. And while people had been expecting the market to correct after setting records this year, he said conditions were favorable for the good times to continue.

His bullish comments follow those of Citigroup Inc.’s head of capital markets origination, Tyler Dickson, who last month said he expects outstanding times to continue for new stock and bond sales. In M&A, Broadcom Ltd.’s $105 billion plan to buy Qualcomm Inc. would mark the biggest ever technology deal. JPMorgan is the second-biggest adviser on global M&A this year, behind Morgan Stanley, according to data compiled by Bloomberg.

Middle East Deals

In the Middle East, Hernandez said JPMorgan’s business is doing “very well” as governments in the region look to diversify their funding away from a reliance on oil. Hernandez declined to comment on the arrests of senior princes, ministers and businessmen in a sweeping crackdown by Saudi Arabia’s Crown Prince Mohammed Bin Salman. Hernandez said the opportunities in the country for investors were “huge” and cannot be ignored.

Almost every government in the Middle East “has tapped the bond markets, and that presented an opportunity for banks like us," he added. "Everybody is looking at the region and saying if Saudi Arabia and the United Arab Emirates are doing these privatizations, that is a huge opportunity."

JPMorgan has overtaken HSBC Holdings Plc as the top bond manager across the Middle East and Africa for the last two years as debt sales from the region hit a record, according to data compiled by Bloomberg. The U.S. bank is also the second-ranked adviser for mergers and acquisitions in the Middle East and North Africa this year, behind Goldman Sachs. It advised Credit Agricole on the sale of about half its 31 percent stake in Banque Saudi Fransi to Kingdom Holding Co. in September.

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