As talk of global recession emerges amid US-China trade war, deal flows and sentiment take a hit
- Merger activity down 25 per cent in China, Hong Kong in first quarter, Mergermarket says
- Companies taking a cautious approach as US-China trade war escalates
Companies are taking a much more cautious view on mergers and acquisitions this year, particularly when it comes to transactions involving the United States and China, as the world’s two biggest economies square off in an escalating trade war, according to deal advisers.
Transaction volumes – and the value of deals – are down, driven by fewer mega deals and increased uncertainty about the global economic outlook, advisers said.
According to research and financial data provider Mergermarket, the number of transactions in China and Hong Kong declined 25 per cent to 348 in the first quarter, compared with 465 deals a year earlier. The value of transactions fell 26 per cent to US$67.6 billion in the first quarter.
“The sentiment for outbound transactions, especially by Chinese companies going into the US, that deal activity has really dried up,” said Miranda So, a partner at law firm Davis Polk & Wardwell in Hong Kong. “In terms of whether people are just holding to ‘wait and see’ what happens in the short term versus holding for a longer period of time, more people are probably in the latter category, waiting for the macro environment to clear up a bit.”
So will be a featured speaker at a Hong Kong M&A forum hosted by Mergermarket and AVCJ on Thursday.
US President Donald Trump has placed tariffs on nearly half of all goods imported from China and threatened to add 25 per cent tariffs to an additional US$300 billion worth of Chinese goods as he tries to force Beijing to change years of industrial and trade policy. China has responded with its own tariffs.