Merger and acquisition activity in Asia is expected to grow over the next year despite the credit crunch, with the mainland maintaining its lead as the biggest market for deals. In a survey by law firm Simmons & Simmons and online publication mergermarket, 91 per cent of respondents said the level of M&A activity would at least remain the same over the next year while 66 per cent forecast it would increase. The survey, which included interviews with 200 chief executives and chief financial officers, found 51 per cent of executives believe that Chinese merger and acquisition activity would dominate the region. Two-thirds of respondents expected that sovereign funds would play a more important role in Asian takeovers in the coming year. 'China will continue to lead the way in regional mergers and acquisitions both in inbound and outbound transactions,' said Damon Le Maitre-George, the head of international corporate practice at Simmons & Simmons. 'China funds are awash with cash' and want to buy assets in the United States and Europe. Beijing's foreign investment policy has changed significantly since 2006, with the government speeding up efforts to gain a presence in international markets. China Investment Corp, the nation's sovereign wealth fund, spent more than US$8 billion buying stakes in private equity firm Blackstone and Morgan Stanley. China Development Bank bought a minority stake in Barclays in July last year. 'The expected slump of the US economy will help China continue to dominate [mergers and acquisitions] in both volume and value of outgoing deals, fuelled by a growing appetite to access foreign markets,' said Julia In, the Hong Kong bureau chief at mergermarket. Still, CIC and China Development Bank have suffered big losses from those investments due to the subprime mortgage crisis. CIC was set up in September last year with initial capital of US$200 billion from the country's massive foreign exchange reserves and is shopping around the world for potential investments to enhance its annual returns. Financial services, natural resources and insurance are key sectors drawing the most interest from both foreign and mainland investors in the merger and acquisition market. Private equity firms are expected to be the major buyers of assets in the mainland market, with the energy and infrastructure sectors the most likely drawcards.