Martin Flanagan: Brighter days around the corner for acquisitions

WORRIED about the impact of George Osborne's cuts in the spending review next week? Relax. Chill out. OK, maybe you shouldn't feel sanguine if you work in the public sector, because those jobs are certainly going to be sweated.

But some think the gloom has been overdone. Remember that old contrary chestnut - buy when there's blood in the streets. And the wailing and gnashing of teeth as people prepare for the worst next week has certainly been excellent mood music for a bloodbath.

Yet there are signs that while the worst seems upon us there is hope springing in the corporate sector like a Chilean coal miner. There are whisperings in the US and the UK that corporates are thinking of borrowing again, not because they are desperate for cash, but because they see opportunities.

Look at Brian Souter. Stagecoach has just done a cracking deal buying a London bus company for 53 million that it sold just four years ago for almost 264m. That was funded out of the group's own cash rather than through debt. But it just goes to prove all those accountants, who insist there are companies with money burning a hole, may be on to something.

Then there's Clive Cowdery. The Wiley E Coyote of the insurance market has surprised watchers again, using his Resolution group to buy Bupa's health assurance business for 165m.

Many were guessing he might buy Aegon UK, maybe the Pru's UK business or even Standard Life. He still might at this rate.

Of course, Cowdery's raison d'etre is to do buyouts. This deal too was funded out of the pot rather than with debt, but it was pretty slick - while the price was actually 165, the target had 86m of reserves before tax to sweeten the deal.

Philip Isherwood, head of equity strategy at Evolution Securities, recently told me an appetite for M&A (mergers and acquisitions to the uninitiated) is an endorsement of a brighter day for corporates. Add to this other signs that companies are starting to pay dividends again and third-quarter earnings are expected to bring pleasant surprises. Isherwood thinks it might just be enough to prove that fears of a double dip are merely the result of shell shock and the corporate sector is ready to lead us out.

And Cowdery's lightning reflexes may just be the sort of thing to get momentum going in the market.

Setting sights towards the east for initial offerings

WHERE does an exchange hungry for initial public offerings go when pickings are slim at home? The Alternative Investment Market (Aim) has its sights firmly set eastward.

Accountancy firm Grant Thornton's India Watch Index says the pipeline of potential Aim flotations coming from the subcontinent is "robust".Which is good news for the exchange when the market for new entrants being traded in the UK has been moribund at best.

But the India Watch Index notes that gains among Aim-listed Indian companies underperformed other UK indicies in the third quarter, although this was mainly due to haphazard performance of one of the index's biggest firms, Vedanta Resources.

While it is sometimes statistically valid to rule out the outliers in order to see more clearly an underlying trend, the performance of Vedanta in particular should not be ignored.

The problems faced by the Indian miner puts in a nutshell the vagaries of investing in big business in India. Readers of The Scotsman know well that Vedanta is working overtime to ensure the Indian government gives it the green light over its move to take a controlling stake in Cairn Energy's Indian oil explorer. A red wave of toxic sludge in western Hungary may have also caused the Indian government to reject Vedanta's proposal to mine bauxite for its Orissa aluminium mine.

Yet perhaps these are just growing pains as UK investors seem keen to tap investment opportunities in emerging markets in both India and Russia. And lucky for investors who, worried about gilts and still sour on UK equities, have these opportunities in well regulated form on their doorstep.