For the first time since 2010, the number of deals made by Chinese firms in the US (M&A is mergers and acquisitions – the buying of US firms) has dropped significantly. While the number of deals fell, the total value of deals rose to $3.5 trillion. This was in a report published Thursday by the media firm Mergermarket. The escalating trade tensions and political instability with geopoltical tensions increasing and taking wind out of all markets that deal in trade and investment – China and the US are seeing the global systems fall, with Trump throwing fuel on the fire.
As a result of these tensions, China has turned its attention to Europe and is snapping up companies with M&A bids rising 81.7 percent to $60.4 billion. While the number of deals fell, individual dael value rose in the US. The average deal size was $385 million. But in the US, Chinese purchases of US firms plummeted by 94.6 percent, falling to a value of $3 billion from a record of $55.3 billion in 2016, according to research released by this same firm.
The global order is fading and according to those experts who are close to this market, it will make larger deals harder to complete. So by 2020 the number of deals could fade significantly and the majority of sending will be domestic. We at Classiarius find this confusing as the reason that Chinese are buying firms overseas is that they do not see solid investment opportunities in China. Just like Japan in the 1990s, when their economy was fading, they were forced to buy overseas – we are seeing the same pattern and flow from China now.