Hong Kong finance M&As plunge to US$1.15b YTD amidst Beijing crackdown

This could mark the lowest possible deal volume in 13 years.

Reuters reports that mergers and acquisition activities in Hong Kong’s financial services sector have notably slowed down in 2018 as China’s stringent crackdown spooked potential buyers.

M&As where financial firms in Hong Kong were targets have hit US$1.15b YTD, data from Dealogic show, compared to the US$5.1b in deal volume recorded in 2017.

The dismal M&A figures comes as Chinese buyers held back dealmaking actiivty in 2018 after only accounting for less than a quarter of deal volume. Over the past six years cumulatively, they made up nearly 60%, or US$21b, of deals worth US$35.3b.

Also read: Commercial property transaction volumes plummeted 65% in Q3 as rattled Chinese investors retreat

In fact, the latest deal reading could mark the lowest M&A activity in 13 years with insurance deals being the hardest hit by Beijing’s capital controls. Hong Kong Life Insurance has already pulled the plug off its US$907m sale to a Chinese consortium in October whilst MetLife has also decided to shelve the sale of its Hong Kong business worth over US$500m.

“Regulations are making people more cautious in thinking about insurance deals,” said Samson Lo, UBS’s head of Asia M&A.

Here’s more from Reuters:

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