China's mergers and acquisitions tumble to US$264b in first half

Business | 19 Aug 2019 4:51 pm

The value of China's mergers and acquisitions fell by 18 percent year-on-year in the first half this year to US$264 billion (HK$2.06 trillion), the largest single-period decline over the last decade, driven by steep falls in outbound and private equity deals amid increasing external uncertainties and more conservative financing environment, according to PricewaterhouseCooopers.

With outbound opportunities limited and the Sino-US trade war in play, China's renewed focus on its domestic economy drove an 8 percent increase in the value of domestic strategic M&A with 28 mega deals and deal volumes climbing by 12 percent, David Brown, PwC deals leaders for Asia Pacific, said.

Foreign inbound investments grew by 64 percent in volume but declined by 29 percent in value.

PwC has not seen the impact of Hong Kong anti-government protest on M&A activities, Chris Chan, PwC Hong Kong and Greater Bay Area deals leader said.

But the political uncertainties are negative for the trading environment, Brown said.

PwC expects the soft M&A activity to extend to the second half, if the political and economic uncertainties do not clear.

Domestic strategic M&A may be the one relative bright spot with China focused on stimulating its domestic economy.

While the subdued activity of financial buyers will continue due to abundant caution on the buy-side and wait-and-see on the sell side, it said.

 

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