China & Hong Kong Cross-Border M&A Drops by More Than 35%

China and Hong Kong saw 1,228 deals announced worth US$ 258.9bn in the first three quarters of 2017, according to Mergermarket’s China & Hong Kong Q1-Q3 M&A Trend Report.

Compared to the same period last year, this accounted for a 12.7% drop in value and 52 deals fewer deals (US$ 296.6bn, 1,280 deals).

China & Hong Kong’s market share in Asia Pacific deal activity found saw 42.9% (Q1-Q3 2017) by deal count and still take up more than half (54.9%) of the whole deal value in Asia-Pacific.

In cross-border M&A, China and Hong Kong recorded US$ 110.9bn among 298 outbound transactions in Q1-Q3 2017, the value was slackened by 35.1% this year.

As a result of China’s strict capital control policy since November 2016, the YTD 2017 outbound activity from the country plummeted 41.7% to US$95.9bn. Hong Kong on the other side marked US$ 42.7bn across 162 deals so far this year and accounted for 70.9% upsurge on value.

Meanwhile M&A in educational & training services (US$ 2,803m, 25 deals) so far this year spurred 72.3% up by value to its historical highest point on Mergermarket record (since 2001) and doubled by deal count versus the same period last year (US$ 1,627m, 12 deals).

The burgeoning imprint was partially contributed to China’s abolition on one-child policy. Institutions providing pre-school education and extracurricular tutoring embraced better expanding opportunities after the policy being carried out.

Moreover, as the “New Promotion of Private Education” Law which allows business offering non-compulsory education to make profit and pay dividends to shareholders being implemented last month, companies are exposing stronger momentum on A-share listings and M&A consolidations.

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