Chinese investments in the US shrink 92 per cent as deals come under greater scrutiny amid trade war
Global M&A activity also hits the lowest level for any single third quarter since 2013
Chinese investments in the US plummeted 92 per cent in the first nine months of 2018 from its peak two years ago, as the escalating trade war and Washington’s intensifying scrutiny of tech investments significantly dampened deal making activity, according to data from Mergermarket on Wednesday.
Chinese M&A in the US reached US$2.67 billion for the first three quarters of this year compared to the all-time high of US$34.4 billion in the same period of 2016. It also reflected a year-on-year drop of 55 per cent from US$5.9 billion achieved in 2017.
“China’s economy is slowing, its currency weakening, and the trade regime is faltering,” said Brock Silvers, managing director at Shanghai-based Kaiyuan Capital, explaining the reasons for the decline in Chinese investments. “This doesn’t indicate a broad foundation for aggressive international expansion. Beijing has also made it difficult to finance offshore deals.”
The funding channels formerly used by giants such as HNA or Anbang are no longer viable.
He added that the US has also adopted a policy of tougher regulatory measures for Chinese acquisitions, while Beijing seems to be encouraging top conglomerates to focus more on domestic investment.
