CHINA FIRMS’ BUY­ING SPREE GRINDS TO HALT

Cross-border pur­chases plunge 67pc in first 4 months

New Straits Times - - Business - JOSEPH GAL­LAGHER

BEI­JING

Tai­wan’s dol­lar has also surged 7.7 per cent against the green­back in the past year, the most among re­gional peers.

While that poses a threat to an econ­omy reliant on ex­ports, Tai­wan has weath­ered the im­pact so fall through, while others are shun­ning Chi­nese bids in favour of low­er­priced of­fers from else­where.

“China’s out­bound merg­ers and ac­qui­si­tion (M&A) ac­tiv­ity will likely re­main slow for the rest of this year,” said Baker & McKenzie LLP part­ner Bee-chun Boo.

The drop-off in deals should help stem cap­i­tal flight and sta­bilise China’s bat­tered cur­rency. But it could also un­der­mine a big pil­lar of sup­port for cor­po­rate valu­a­tions around the world.

Last year’s 137 per cent surge in Chi­nese takeovers vaulted the coun­try to No. 2 be­hind the United States on the rank­ing of global ac­quir­ers.

Through the end of Septem­ber, author­i­ties planned to curb off­shore ac­qui­si­tions of US$1 bil­lion or more in in­dus­tries out­side far. Or­ders for out­bound ship­ments jumped 12 per cent in March from a year ear­lier.

“Ap­ple is a driver to Tai­wan stocks to breach the 10,000 mark,” said Hua Nan Se­cu­ri­ties vice-pres­i­dent Co David Lu. a buyer’s core busi­ness, said peo­ple.

They would also ban most in­vest­ments of US$10 bil­lion or more and re­strict for­eign prop­erty pur­chases ex­ceed­ing US$1 bil­lion by sta­te­owned en­ter­prises, they added.

“Cap­i­tal con­trols have clearly had a damp­en­ing ef­fect on China’s out­bound M&A ac­tiv­ity,” said Credit Suisse Group AG head of merg­ers and ac­qui­si­tions for the Asia-Pa­cific re­gion, Joseph Gal­lagher. “Chi­nese firms, es­pe­cially those that are do­mes­ti­cal­lylisted, will likely have a much harder time to do deals as they typ­i­cally do not have off­shore fi­nanc­ing ve­hi­cles or ac­cess to off­shore fund­ing,” he said. Bloomberg

Cap­i­tal con­trols have clearly had a damp­en­ing ef­fect on China’s out­bound M&A ac­tiv­ity.

The Taiex rose 0.3 per cent to 10,001.48 at the close yes­ter­day, tak­ing its gain for the year to more than eight per cent.

TSMC was the big­gest boost as it traded at a record price. Bloomberg

BLOOMBERG PIC

Tai­wan Semi­con­duc­tor Man­u­fac­tur­ing Co, an Ap­ple Inc sup­plier, was the big­gest boost to Tai­wan’s bench­mark in­dex yes­ter­day as it traded at a record price.

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