Asian mergers and acquisitions fell steeply in July and last month as the region's vulnerability to the subprime crisis in the United States and Europe hit home. The value of mergers and acquisitions in Asia fell 17.3 per cent year on year to US$396 billion in the first eight months of this year, according to the Bureau Van Dijk Electronic Publishing (BVDEP), a European publisher of corporate information. The fall in deal values in Asia - including Japan, Greater China, Southeast Asia and Central Asia - was particularly sharp in July and August, with a 34.9 per cent year-on-year drop to US$36.4 billion in July and a fall of 65.6 per cent to US$21.4 billion last month, BVDEP said. In comparison, the global value of mergers and acquisitions fell 32.4 per cent to US$418 billion in July and 28.2 per cent to US$214 billion last month. 'The drop in [mergers and acquisitions] is a combination of several factors, including the subprime crisis, rising oil prices and raw material costs, currency fluctuations and the banking industry, which is struggling to do deals and laying people off,' said Lisa Wright, managing director of Zephus, a subsidiary of BVDEP. Despite the sharp drop in deal values in the past two months, Adrian Bradbury, director of Hong Kong financial services group Quam Capital, was cautiously optimistic about the prospects of mergers and acquisitions in Asia. Mr Bradbury said monthly figures could be skewed by a few major deals, and July and August were a summer holiday period when deal activity normally would slow down. Nonetheless, Mr Bradbury said: 'This subprime crisis is having a bigger impact on Asia than most pundits earlier suggested. Most people disagree that Asian economies are decoupled from Europe and North America, but [they] agree North America and Europe are harder hit than Asia by the subprime crisis.' In a poll of 50 corporate executives and 50 financial advisers, only 14 per cent believe Asia's economy is decoupled from Europe and North America in the current subprime crisis, while 48 per cent believe Asia is linked to Europe and North America. The survey was conducted earlier this year by Mergermarket, a financial intelligence firm owned by Financial Times Group. About 40 per cent of the respondents predicted the value and volume of deals in Asia would increase this year, while only 14 per cent predicted a decrease. In contrast, 63 per cent of the respondents believed the value of deals would fall in North America this year, while 81 per cent said deals would remain the same or drop in Europe. In the first half of this year, deal values fell 45 per cent in North America and one-third in Europe, BVDEP said. Asia did better with a 6.3 per cent decline.