27 Jan 2021
Posted in Business Fundamentals
Despite inconsistent M&A deal activity, China continues to be key global growth engine in Q4 2020, reveals GlobalData
Mergers and acquisitions (M&A) deal activity in the Asia-Pacific (APAC) region remained inconsistent during the fourth quarter (Q4) of 2020. Akin to most of the APAC countries, China also experienced inconsistent activity but continues to be a key global growth engine as global investors see it as an attractive investment destination with the further opening up of policies, reveals GlobalData, a leading data and analytics company.
An analysis of GlobalData’s Financial Deals Databases shows that a total of 1,835 M&A deals were announced in the APAC region during Q4 2020. The number of announced M&A deals in the region increased by 1.9% from 632 in October to 644 in November before shrinking by 13.2% to 559 in December.
China, which is the leading APAC market and accounted for 29.1% share of the region’s M&A volume during Q4, also had its share of ups and downs. However, its share of deal volume always continued to stay around 30% during the quarter.
The number of announced M&A deals in China increased by 10.7% from 178 in October to 197 in November before shrinking by 19.3% to 159 in December. Its share of deal volume stood at 28.2%, 30.6% and 28.4% during October, November and December, respectively.
Aurojyoti Bose, Lead Analyst at GlobalData, comments: “There has been a clear divergence in M&A activity between China and other APAC countries. Apart from domestic M&A, China also managed to see sizeable inbound acquisitions with foreign players investing in acquiring Chinese assets.”
While Chinese companies such as Xuzhou State Investment & Environmental Protection Energy Co., Ltd., State Power Investment Corporation Guizhou Jinyuan Weining Energy Co., Ltd and Beijing ByteDance Technology Co Ltd undertook multiple domestic acquisitions during Q4, foreign companies such as SK Hynix (South Korea), Peak Fintech Group Inc (Canada) and Triumph Lead (Singapore) Pte. Ltd were also seen eyeing Chinese assets.
Australia, Japan, India and South Korea were the other top four markets by deal volume. While deal activity remained inconsistent across most of these key markets, Japan is the only country among them that witnessed consistent decline in deal volume during the quarter. It also witnessed consistent decline in the share of deal volume. In contrast, Australia was a notable exception that witnessed consistent increase in its share of deal volume.
Mr. Bose concludes: “Even though the M&A deal activity witnessed fluctuating fortunes during the fourth quarter on account of the uncertain and volatile macro-economic backdrop, China is well placed to drive the growth of the APAC region in 2021.”