Why China’s outbound shopping spree may have peaked
Chinese interest in outbound acquisitions remains high, but global uncertainty and added scrutiny from Beijing may dent deal volume, say analysts
China’s outbound shopping spree probably peaked this year - but there’s still plenty of interest in buying up companies, say analysts.
Earlier this month, Beijing announced it was increasing oversight of international acquisitions, the latest move in a bid to stem capital flight and protect the weakening yuan.
The added scrutiny, coupled with heightened uncertainty stemming from European elections and Donald Trump’s inauguration as US president, may see the volume of outbound M&A deals brought down next year after hitting record highs in 2016, as inexperienced companies wait on the sidelines and investments that lack obvious rationale get pushed back.
I think there are going to be some high-profile deals that might be harder to get through
Emma de Ronde, a partner at Hong Kong-based law firm Norton Rose Fulbright, said it would not surprise her if outbound deals had peaked in 2016 and dropped off next year.
“I think there are going to be some high-profile deals that might be harder to get through,” she said, noting real estate was a particular focus for the regulators.
“It wouldn’t surprise me if we’d seen the peak this year, and if there is a pullback from next year.”
Chinese acquirers spent around US$213 billion on more than 700 outbound deals in the first 11 months of this year - up on last year’s US$83 billion on 527 deals for the same period, according to Dealogic data.