Trade war thumps confidence, sending acquisition activity in Asia to a six-year low in the half, Mergermarket data shows

The value of mergers and acquisitions shrank by 36 per cent in Asia during the first six months of 2019 to a six-year low, led by declines in China-related deals as the US-China trade war and increased regulatory scrutiny stifled deal making.

The value of M&As fell to US$241 billion during the first half in Asia excluding Japan, the lowest since 2013, according to data by Mergermarket. Declines picked up pace in the second quarter, falling by nearly a third to US$97 billion through 743 transactions, compared with US$143.9 billion a year earlier, the data showed.

The biggest drop was seen in China-related deals, down 44.7 per cent in the first half, while those of Hong Kong fell by 11.1 per cent. The biggest deal for the period was CapitaLand’s US$8.1 billion purchase of Ascendas-Singbridge from the Singapore government’s investment arm Temasek Holdings.

But that deal pales when compared with the 19 mega transactions in the US, which together contributed as much as 59.5 per cent of total US deal value across 2,530 transactions. The biggest was Bristol-Myers Squibb’s US$74 billion acquisition of cancer drug developer Celgene.

Larger deals, defined as those that exceed US$10 billion in value, are viewed as more favourable by investment banks because they generate larger fees.

In Asia excluding Japan, whose share of the world M&A market in the first half dropped to 13.4 per cent from 18.6 per cent a year ago, the top three financial advisers were Bank of America Merrill Lynch, Goldman Sachs and JPMorgan Chase & Co.