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October 14, 2016

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China’s M&As seen robust in long run

CHINA-RELATED mergers and acquisitions are expected to remain robust in the long run even as latest data pointed to a slowing pace of M&As amid regulatory uncertainties, industry experts said.

Both domestic and inbound mergers and acquisitions targeting Chinese mainland and Hong Kong firms slumped by 10 percent year on year to US$108.9 billion in value in the third quarter of this year, data compiled by Mergermarket showed.

In the first three quarters, the value of M&As shed 19.5 percent from the same period of last year to US$315.8 billion as deals in real estate and consumer sectors fell, data showed.

A slowing economic growth and a depreciating yuan continued to spur Chinese companies to buy abroad, with the outbound deal value totaling US$171.7 billion in the first three quarters, almost doubling the annual record in 2015.

However, the pace of outbound M&As continued to slow as the deal value fell to US$40.6 billion in the third quarter from US$46.6 billion in the second quarter and US$84.5 billion in the first three months.

Industry insiders attributed the slower pace to tighter regulatory control on capital flows amid currency volatility.

“Chinese regulators have imposed a stricter and more time-consuming vetting process on outbound transactions to crack down on capital outflow via fake trade deals,” Eric Liu, senior consultant of law firm Linklaters LLP, said yesterday.


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