Chinese overseas M&As jumped 152 per cent in third quarter, but still more than 40 per cent behind 2018, Ernst & Young says

Overseas mergers and acquisitions by Chinese companies jumped by 152 per cent in the third quarter, but were still 44.6 per cent below last year’s tally for the January to September period, according to a report released by consultancy Ernst & Young on Tuesday.

The total value of China overseas M&As for the third quarter stood at US$19.8 billion, an increase of 152 per cent over the second quarter that also reversed a downward trend, Ernst & Young said. For the nine-month period, the total value of signed overseas M&As stood at US$42.8 billion, the lowest recorded by the consultancy since 2014.

“Facing the complex and volatile economic and trade environment in both China and overseas countries, we have seen the consumer products sector taking the lead in overseas M&As. This is largely due to huge potential of domestic demand in China's consumer market, and the urgent need for stable and sustainable development,” said Loletta Chow, global leader of the EY China Overseas Investment Network.

In a sign of recovery, more Chinese companies have started to make purchases abroad, shrugging aside concerns about the ongoing US-China trade war and economic volatility. This year, China’s economic growth fell to its lowest levels in a decade. Its third-quarter gross domestic product grew at 6 per cent, its slowest pace in 27 years.

In the first three quarters of 2019, 424 overseas M&As were sealed by Chinese companies, down by 31 per cent from last year, according to Ernst and Young. Consumer products, technology, media and telecommunication, as well as the financial services sector were the three major contributors.