VOICE FROM CHINA – 2ND EDITION 2019

Source: Oaklins

Quarterly Update on the M&A Market in China

Our Shanghai-based Oaklins specialist, Angela Chen, examines the factors influencing the decline in cross-border M&A transactions during Q1 and anticipates a reversal in Q2 as the country’s capital markets ramp up. She explains why news of a possible US-China trade deal, the relaxation of China’s monetary and lending policies, and the new Foreign Investment Law look set to create an increasingly attractive business climate for foreign investors.

In addition to charting recent M&A transactions, we focus in on the lightweight auto parts industry. The objectives driving Chinese parts makers to acquire foreign companies in this sector are illustrated in our featured case study, the acquisition of SAM Automotive Production GmbH by Fuyao Glass Industry Group.

“In Q1 2019, we have seen the lowest number of cross-border transactions in the last five years. We read it as the lagged reaction to 2018’s tough environment, both from slower economic growth internally and a geopolitical power confrontation externally. A possible breakthrough in the Sino-US trade war is expected, according to the latest news from The Wall Street Journal: ‘US, China Aim to Sign Trade Deal in Late May or Early June.’ And with the alleviation of POEs’ liquidation problems by China’s loosening of monetary and lending policies, the number of cross-border M&A transactions should be on the rise again in Q2.”

ANGELA CHEN, MANAGING DIRECTOR, OAKLINS CHINA

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