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China's M&As pick up in second quarter

CHINA'S merger and acquisition activities picked up in the second quarter with the economy showing signs of a recovery and the real estate sector posting strong growth, an industry report said today.

Domestic M&A transactions increased to 811 deals in the second quarter compared to 616 in the first three months, said a PricewaterhouseCoopers report today, quoting data supplied by Thomson Reuters.

"The recovery in the second quarter was driven by domestic activities with foreign inbound activities remaining subdued," said Benjamin Ye, PwC's transaction services lead partner in Shanghai.

"Domestic deals are likely to recover to the 2008 level during the second half of this year as China's economy continues to recover," he said.

Domestic deals increased to 708 in the second quarter from 519 in the first quarter. Foreign-backed deals inched up to 103 from 97 in the same period.

China' economy grew a better-than-expected 7.1 percent in the first half, with growth of 7.9 percent in the second quarter.

Chinese investors are better cushioned than overseas investors against the financial crisis. China's relatively easy monetary policy also provided domestic investors with easy capital channels.

Banks in China extended 7.37 trillion yuan (US$1.1 trillion) of new loans in the first half, already surpassing the 5 trillion yuan target set at the beginning of the year.

The central government last week reiterated continuing the easy monetary policy despite market concerns of a possible rebound in bad loans.

M&A's in the real estate industry were active in the second quarter.

Developers are expected to seize the opportunity of a rebounding market to obtain capital. The industry is expected to be active in the second half.

Real estate activities increased almost 50 percent to 88 in the second quarter over the first three months. The value of deals more than doubled to US$4.9 billion in the second quarter from US$2.3 billion a quarter ago.


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