UBS: Expects M&A deal volume in Greater China to rebound by over 15% year-on-year next year, ending a three-year decline

According to the Zhitong Finance APP, UBS Investment Bank's co-head of M&A for the Asia-Pacific region, Lu Suicheng, pointed out at a press conference that considering the stabilization of interest rates next year, the active privatization and private equity funds are expected to lead to a rebound in M&A transaction volume in the Greater China region, ending a three-year decline with a year-on-year increase of over 15%, returning to the 2023 level of USD 381 billion, mainly driven by privatization, overseas mergers and acquisitions, and foreign companies selling their mainland businesses. Among them, due to scale and financing costs, private equity transactions are expected to be driven by multiple funds; overseas mergers and acquisitions are likely to focus mostly on Europe, but it is estimated that most of the scale will involve less than USD 1 billion.

The bank expects that this year, the M&A transaction volume in the Greater China region will be CNY 325 billion, a year-on-year decrease of about 15%, marking a new low in 15 years.

Lu Suicheng described that there will be healthy growth next year and in 2026, but he does not expect to see the levels of CNY 600 billion to CNY 700 billion from 4 to 5 years ago, as the fundamentals of large mergers and acquisitions, such as financing costs and regulatory approval situations, have changed, and he believes this situation will continue for the next 3 to 4 years. He also pointed out that next year there will be more focus on mergers and acquisitions related to the automotive and AI industries, as well as the transformation of old industries. In addition, most mainland-based funds have had more inquiries about Southeast Asia and Japan in the past 12 to 18 months. Regarding mergers and acquisitions in the Middle East, he believes that transactions still tend to be joint ventures and asset allocations in the local Middle East.

As for whether the U.S.-China relations will advance transactions after the incoming U.S. President Trump takes office next year, he believes it still needs time to observe, but currently, there is no sign of accelerated mergers and acquisitions involving business restructuring or companies affected by tariffs.

When asked about the low valuation of Hong Kong stocks and the recent emergence of suspected takeover battles raising hostile takeover concerns, Lu Suicheng does not believe there is a hostile takeover atmosphere in Hong Kong, and that foreign capital increases may be pre-transaction buying, while hostile takeovers in Hong Kong are also difficult to execute