Inbound deals surpass outbound in China for first time in a decade: Baker McKenzie

Source:Global Times Published: 2020/6/29 13:53:42

Gérard Brémond (left), the founder and chairman of PVCP Group and Xia Nong, the president and CEO of HNA PV Tourism Company Ltd during the ceremony Photo: Courtesy of HNA PV Tourism



 Chinese buyers remained relatively inactive in the first five months of this year, with total outbound deal values and volumes surpassed by inbound deals for the first time in a decade, according to research by Baker McKenzie and Rhodium Group. 

According to the report, Chinese outbound merger and acquisition (M&A) activities plunged from January to May was down 93% to $1.4 billion in Europe and down 89% to $700 million in North America, dwarfed by M&A into China, which totaled $9 billion.

The deal dropped around 71 percent in volume and 88 percent in value compared to the same period last year. From January to May, only 30 transactions were announced per month, compared to 90 per month from 2016-19. 

Outbound deal volumes and values were both surpassed by inbound deals for the first time in 10 years. According to Baker McKenzie, the first five months of this year saw announced foreign M&A into China total $9 billion. 

Outbound deals made by Chinese firms in Europe and the US, where authorities have announced toughened regulations to limit foreign buying, are also in sharp decline. 

Governments in many Western countries including Spain, France and Australia haven been introducing rules intended to limit foreign buying to protect assets in their own countries. Against the backdrop of declining Chinese investment activities, the toughened restrictions so far appear "unfounded," the report said. 

The drop in outbound investment and buying is a global phenomenon. Asia saw a 65 percent drop in value, and takeovers announced in Europe fell 93 percent from $19.5 billion to $1.4 billion, according to the report. Deals in North America fell from $6 billion to $700 million. 

"In comparison to the boom years, China's outbound investors are simply not in the same position to ramp up overseas buying at the moment," the report said, quoting Thomas Gilles, chair of the EMEA-China Group under Baker McKenzie.

 "Chinese companies with global ambitions face a very different environment today, due to the combination of heavier debt loads, tighter domestic liquidity conditions, Beijing's controls on outbound capital flows and an increase in trade and investment restrictions abroad."

Global Times 



Posted in: ECONOMY

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