Asia-Pacific Region Experiences 12.4 Per Cent Decline In Deals During First Month of Q3 2022

Uncertainties in the geopolitical and macroeconomic world are turning investors of Asia Pacific region (APAC) more and more risk averse. Despite having good results in the Quarter 1 and 2 of 2022, average of first month of Quarter 3 is cuing towards the headwinds coming with monsoons. In July 2022, a total of 1,342 deals (mergers and acquisitions (M&A), private equity, and venture financing deals) were announced in the region, which is a decline of 12.4 percent  over the 1,532 deals announced in June 2022,  a report by Global Data said.

The reports also found out that the deal volume in July was down by 14.8 percent and 4.3 percent, as compared to the monthly average of Q1 and Q2. Venture Capital funding activity in this year is also being seen fluctuating with July reversing the growth trend.This follows 9.6 percent  year-on-year growth in deal volume in H1 2022 despite China, which is the most prominent APAC market, witnessing a decline in deal activity.

Aurojyoti Bose, Lead Analyst at GlobalData, says, “The decline in July can be attributed to the subdued activity experienced across several key markets. Several APAC countries are going through economic distress causing slowdown in deals activity.”

Most of the APAC markets including China, India, Japan, South Korea, Australia, Singapore, Indonesia, and Hong Kong witnessed a decline in the deal activities. Meanwhile, Malaysia and New Zealand were the notable exceptions to register improvement in deal volume by 4.5 percent and 33.3 percent, respectively.

All the deal types under the coverage witnessed decline in volume. The number of M & A, venture financing and private equity deals decreased by 15.8 percent, 8.7 percent and 27.5 percent, respectively, in July 2022 compared to the previous month.

The volume of every deal type covered by the coverage decreased. Comparing July 2022 to June 2022, there were 15.8 percent, 8.7 percent, and 27.5 percent, less merger and acquisition, venture capital, and private equity deals, respectively.

Bose concludes, “Just as the deal activity across APAC was beginning to show some signs of resilience during H1 2022, the ongoing global geopolitical risks undid the gains. Any rebound in H2 2022 will depend on how the regional governments respond to the evolving socio-political developments.”