MARKETS & INVESTING | Staff Reporter, Singapore

M&As in North Asia dropped 8.3% as early-stage deals in Korea tumble

Hong Kong is being dragged in the decline.

Early-stage mergers & acquisitions (M&A) announcements are expected to be flat in Q4 2016 compared to the same period last year, due to reduced levels of early-stage M&A activity in Southeast Asia and South Korea.

According to a release from Intralinks, specifically, Southeast Asia which includes Singapore, Malaysia and Indonesia, is demonstrating a 47.8 percent decrease, while North Asia which includes China, Hong Kong and South Korea, is showing an 8.3 percent decline in early-stage M&A activity.

The Asia-Pacific (APAC) is the only region along with North America (NA), showing flat or negative growth, while Europe, the Middle East and Africa (EMEA) and Latin America (LATAM) are showing positive growth at 15.7 percent and 10.7 percent respectively. This is according to the latest Intralinks Deal Flow Predictor (DFP) report released by Intralinks Holdings, Inc. (NYSE:IL), the leading global provider of software and services, including virtual data rooms (VDRs), for managing M&A transactions.

The Intralinks Deal Flow Predictor forecasts the volume of future M&A deal announcements by tracking early-stage M&A activity - M&A transactions across the world that are in the preparation stage or have reached the due diligence stage. These early-stage deals are, on average, six months away from their public announcement.

Here's more from Intralinks:

If we look at key countries across the APAC region, the Intralinks Deal Flow Predictor shows the following growth in early-stage M&A activity compared to the same period last year: Southeast Asia (which includes Indonesia, Malaysia and Singapore), is down 47.8 percent; North Asia (which includes China, Hong Kong and South Korea) is down 8.3 percent, due to declining levels of early-stage M&A activity in South Korea; India is up 64.7 percent; Japan is up 5.9 percent; and Australia is up 6.9 percent, the first quarter of growth after four consecutive quarters of flat or declining activity.

Looking at early-stage M&A activity by sector across APAC, the Materials (which includes Metals and Mining) and Industrials sectors are the only ones showing positive growth in early-stage M&A activity. The TMT (Telecommunications, Media & Technology) sector is showing a 46.2 decline compared to the same period last year.

According to a “post-Brexit” survey of over 1,000 global dealmakers conducted by Intralinks between July 4-8 2016, over 61 percent of APAC dealmakers feel Britain’s decision to leave the European Union (EU) will have a positive or no economic impact on the APAC region. In the four weeks since the UK’s EU Referendum on June 23rd 2016, early-stage M&A activity in APAC, as measured by the Intralinks Deal Flow Predictor, has increased by 1.4 percent compared to the same period last year, showing little or no immediate impact on the APAC region’s M&A activity.

“Southeast Asia is seeing its first decline in early-stage M&A activity after nine quarters of mostly double-digit growth,” said Philip Whitchelo, vice president of strategy & product marketing at Intralinks. “The impact of China’s gradual economic slowdown may be starting to impact the previously resilient ASEAN region, as South Korea and China are also showing declines.”

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