The trade war which Donald Trump started with China in 2017 is said to be showing negative repercussions on the merger and acquisitions market of the United States. It’s said that the government of China is requesting companies like HNA and Anbang to invest more in the home turf in order to encourage domestic growth.
For this reason, the purchase of US firms by Chinese companies witnessed a 95% decline in 2018 according to research carried out by Global research group ‘Mergermarket’.
Trade analysts say that a drop in US purchases saw a jump in merger activities in the Asia Pacific region taking the percentage to 52.4% to reach $160 billion in 2018.
Researchers from MergerMarket say that Chinese companies are now interested in acquiring companies operating in Europe as an 81.7 percent growth accounting to $60.4 billion was witnessed in the previous year.
“As the 45Th US President intensified trade tensions, and increased regulatory scrutiny, it is showing a direct toll on the number of deals struck over the year”, said Elizabeth Lim, the Editor in Chief at Mergermarket.
Furthermore, the Trump administration is in no mood to stop or at least slow the clamp down on Chinese Investments.
Adding to the agony is the US Congress’s law of Aug’18 empowering an interagency body, the Committee on Foreign Investment in the United States(CFIUS) to broaden the scope of reviews on Chinese investments in US companies- on National Security grounds.
And the best example to prove this instance is the recent stoppage of Alibaba’s acquisition of US Payment Company MoneyGram amid fears that the former might leak out the secrets of US military services to the Chinese intelligence after acquiring the latter.
Hence, all these developments are said to have made the government of China advice to its firms to think twice before investing in US companies in 2018 and this led to a 95% slump down in 2018 acquisitions in the US markets by Chinese players.