Natixis Asia M&A Monitor: Inbound Declined and Reshuffled, with Covid-19 and Geopolitics Boosting Bids to Southeast Asia

Covid, rising interest rates, and heightened geopolitical risks have dampened the overall cross-border international investment appetite; China’s growth weakened on the persistence of the zero-Covid policy, regulatory restrictions and the real estate demise. Meanwhile, ASEAN, India, South Korea and Australia normalized growth since exiting strict Covid policies. On the supply side, regulatory restrictions to inbound M&A have increased not just in the US and EU but also in Australia and Japan. In turn, EM Asia – including China, primarily in services – eased restrictions somewhat.?

The number of inbound M&A deals into Asia fell in first half 2022, both by number of cases and total value. ASEAN and India attracted significantly more capital since 2020 while China saw much less appetite, especially when focusing on inbound completed deals.

The US was the largest investor in Asia while China’s role declined. That said, everyone was bidding more for ASEAN and India’s assets, including China; Bids from the US and EU for Chinese assets are down but those of Japan and South Korea are up. In developed Asia, the US dominates while China’s bids decline, especially in Australia.?

All sectors declined except for infrastructure, which was driven by Australia. ICT received the most bids and most of which went to ASEAN. India received more M&A for the auto sector, whereas ASEAN received most in energy and real estate. Australia dominated most of the M&A bids into developed Asian economies.?

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