First-half M&As by Hong Kong-listed companies shrink to six-year low as trade war, weaker yuan deterred dealmaking

First-half M&As involving Hong Kong companies fell 14 per cent to a six-year low of US$45.8 billion

Total equity market fundraising, including initial public offerings, rights issues, and shares placements, fell 46.7 per cent to US$18.7 million

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A general view of Greenland's complex in Huangpu district in Shanghai, which sold for US$1.55 billion in April to Brookfield Asset Management. The real estate sector was the most active in terms of merger and acquisitions in the first half. Photo: Greenland USA

Published: 7:00am, 2 Jul 2019Updated: 7:00am, 2 Jul 2019

Mergers and acquisitions declined in Hong Kong to a six-year low during the first half of 2019, as economic uncertainties wrought by the US-China trade war deterred deal makers, while tightened capital controls on the mainland stymied fund flows.

Deals involving Hong Kong-listed companies fell 14 per cent to US$45.8 billion in the first six months, the second year of declines, marking the lowest first-half M&A activity since 2013, according to data by Refinitiv.

“The slow down was the result of a stricter monitoring process for outbound capital flow” in mainland China, said Clement Chan Kam-wing, managing director of accounting firm BDO. “This was compounded by the complication that the [US-China] trade dispute could easily escalate into further polarisation of the world into two camps. It is not difficult to see [why] cross-jurisdictional M&A slowed down under the current situation.”

Caught in the year-long trade war between the world’s two largest economies, Hong Kong’s businesses are struggling to regain their paces, many considering plans to shift their production facilities in mainland China to elsewhere in Southeast Asia to skirt US tariffs on Chinese products.

M&A activity was further dented by the 5 per cent deterioration of the renminbi against the US dollar in the past 12 months, which has made overseas acquisitions costlier in yuan terms.

First-half M&As by Hong Kong-listed companies shrink to six-year low as trade war, weaker yuan deterred dealmaking

First-half M&As involving Hong Kong companies fell 14 per cent to a six-year low of US$45.8 billion Total equity market fundraising, including initial public offerings, rights issues, and shares placements, fell 46.7 per cent to US$18.7 million

First-half M&As involving Hong Kong companies fell 14 per cent to a six-year low of US$45.8 billion

Total equity market fundraising, including initial public offerings, rights issues, and shares placements, fell 46.7 per cent to US$18.7 million