Deal activity drops in APAC region

Yasmine Raso

Senior Journalist, Financial Newswire

19 June 2023

New figures from GlobalData found the Asia Pacific region experienced a year-on-year (YoY) decline in deals activity from January to May when compared to the previous year.

The 25 per cent plunge was felt across all types of deals including mergers and acquisitions (M&A), private equity and venture financing deals, and was attributed to the overall uncertainty felt across global markets amid interest rate pressures, inflation and recessions.

The number of M&A deals fell by 16 per cent YoY from January to May 2023, with volume also not exempt from feeling the squeeze – private equity and venture financing deals also dropped by 15 per cent and 32 per cent, respectively.

According to GlobalData’s Financial Deals Database, there were 5,707 deals announced in the APAC region between January and May 2023, just under 2,000 less than the 7,604 deals announced during the same period in 2022.

“Deal activity in APAC region declined considerably as several economic headwinds have been impacting the investors’ decisions,” Aurojyoti Bose, Lead Analyst at GlobalData, said.

“The major reasons behind the decline include geopolitical tensions, inflation, and recession fears. Several key markets in the APAC region experienced decline in deal activity during January-May 2023.

“In fact, China which is the top APAC market in terms of deals volume, registered a YoY decline of 15% in the number of deals announced during the period.”

Indonesia saw the largest decline in deal volume in the same five-month period at 43 per cent, with other key markets impacted include New Zealand (40 per cent), South Korea (40 per cent), India (36 per cent), Hong Kong (33 per cent), Singapore (29 per cent), Australia (23 per cent), Japan (19 per cent) and Malaysia (10 per cent).

“Deal sentiment across the word is of cautious tone, and APAC is not an exception, as bearish market environment is weighing on investors’ appetite for deal making,” Bose said.

“GlobalData expects the prevailing market volatility and geopolitical tensions to force prospective investors to carry out more rigorous due diligence in their hunt for deals.”