Outlook Remains Positive Despite Decline in China's M&A Appetite

The appetite for mergers and acquisitions among Chinese companies  dropped 6 percent between January and June 2014, equating to an increase of only 8 percent over 12 months, while global appetite for M&A grew 16 percent from a year ago, according to KPMG.

“Sentiment in China has been hit by a combination of factors recently, impacting both local investor appetite and the market’s relative attractiveness for global fund allocators," says Rupert Chamberlain, Head of Transaction Services, KPMG China.

Anticipated capacity for M&A rose 17 percent in China year-on-year. This was higher than the global average of 13 percent for the same period. However, this is yet to translate into deal completions, which continued a downward trend.

According to KPMG analysis, deal values for Chinese outbound M&A edged down 4 percent year-on-year to US$35.6 billion in the first half of 2014, while deal volumes dropped nearly a quarter to 167.

Highlights of outbound M&A include several deals completed in the natural resource sector in Australia, Canada and Peru.

In terms of inbound investment, a sharp drop in both values and volumes was noticed.

A total of 204 deals were recorded through the first half of 2014, a 27 percent drop from 280 deals in the same time last year; deal value was down 24 percent to US$10.8 billion.

Consumer goods and services led all other inbound M&A sectors through the first half of 2014.

Despite a slight decline in deal value versus 2013, transactions of a significant size continue to be prevalent in the diverse consumer goods and services sub-sectors.

Meanwhile, the materials sector also bucked the downward trend seen in 2014.


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