M&A to pick up pace in 2017
Hong Kong’s centrality and position as a financial and corporate hub for Asia and the Pacific played a huge role in the consistent sustainable showing of the territory’s M&A activities in 2016. Primary reason for this remains the rising transactions of mainland Chinese companies increasing their stakes and deals in putting their interest in the Special Administrative Region.
With the rest of the region maintaining a cautiously positive outlook towards growth in deals, Hong Kong is expected to remain as one of APAC’S bastion for transactions. This is despite several factors including the looming increases in policy rates internationally, policy reforms in major markets like mainland China, and the rise in protectionism that’s currently creeping in international financial and trade markets. 2016 was good for Hong Kong’s M&A, but experts are saying 2017 may well be better if the right precautions are taken as various uncertainties abound.
The last twelve months was a relatively positive year for M&A activities in Hong Kong despite a decline in actual growth rate compared to figures in 2015. According to Elaine Tan, senior analyst, deals intelligence. Asia-pacific, Thomson Reuters, overall announced M&A activity involving Hong Kong-based companies totalled US$152.4B in 2016, down
44.2% after coming from a record high in 2015 at US$272.9B. But the 2016 figures, according to Tan, remains a positive and elevated one when compared to historical M&A activity in Hong Kong.
In terms of average M&A deal size for disclosed deals, Tan shares that numbers also declined yearon-year to US$99.7M compared to the US$218.8M recorded in 2015 as less transactions above
US$1B were witnessed involving Hong Kong-listed companies over the last 12 months. In absolute terms, the Special Administrative Region only saw 24 deals above the billion-dollar mark with only two breaching upwards the US$5B threshold compared to 2015’s stellar figures with 33 deals announced above the billion-dollar mark, three of which were “jumbo deals” above US$10B, according to Tan. She adds that the M&A deal flurry in 2015 continued its positive momentum last year.