Just as the deal activity across the Asia-Pacific (APAC) region was beginning to show signs of resilience during the first quarter (Q1) of 2021 following last year’s volatile headwinds, the second wave of COVID-19 undid the gains. The region witnessed a sharp 21.4% decline in deal activity in April, reveals GlobalData, a leading data and analytics company.

An analysis of GlobalData’s Financial Deals Database reveals that a total of 1,053 deals (mergers & acquisitions, private equity and venture financing) were announced in APAC during April 2021, compared to 1,339 deals announced during the previous month. The deal volume during the month also remained below the Q1 monthly average level.

Aurojyoti Bose, Lead Analyst at GlobalData, comments: “After remaining mostly subdued during the first half of 2020, deal activity in the APAC region recovered sharply in Q3 before declining in Q4. The trend continued in January 2021, during which deal activity nosedived by 42.3%. However, deal activity gathered momentum in the next two months. Now, the resurgence of COVID-19 cases in key markets such as China, India, Australia, and Japan across the region is affecting deal-making sentiments and the threat of new virus strains seems to be making things even worse.”

China, India, Japan, Australia, Malaysia, Hong Kong and Indonesia witnessed decline in deal volume by 24.8%, 20.4%, 39.6%, 21.6%, 11.1%, 45.7% and 23.1%, respectively. However, Singapore and South Korea were the notable exceptions with 10.7% and 30.1% growth, respectively.

All the deal types (under coverage) also witnessed decline in April compared to the previous month with the number of private equity, merger & acquisitions (M&A), and venture financing deals decreasing by 44.9%, 25.3%, and 15.4%, respectively.

Mr Bose concludes: “The second wave of COVID-19 is likely to pose a downside risk to the deal activity in the region for at least the next couple of quarters as uncertainty continues to grip the sentiments of investors. Hence, a vigilant approach and risk aversion could be the probable strategy for investors in the near-term.”