24/09/20 – Mergers / Acquisition / Euromonitor / South East Asia / US / China / India / Philippines / Vietnam

South East Asia M&A activity set to surge ahead of China and the US in 2021
South East Asia M&A activity set to surge ahead of China and the US in 2021

Major merger and acquisition deals this year have been put on hold due to market volatility amid the Covid-19 crisis, with a 25-per-cent decline in the first half of 2020. Using its latest M&A Investment Index, global market research company Euromonitor International expects South East Asia to become a more attractive destination for such activity next year and to claim a larger proportion of the M&A pie.

Between 2015 and 2019, China and the US led the way as the two most dynamic M&A markets, together accounting for 38 per cent of global transactions, according to Euromonitor International. However, with the political landscape and coronavirus pandemic affecting the global economy, countries are now diversifying their supply and value chain strategies away from China to South East Asia.

India, Philippines and Vietnam on course for rapid growth

The region’s low borrowing costs and depressed asset values will present acquisition opportunities for businesses from the US and Western Europe.

“Countries such as India, the Philippines and Vietnam are forecast to grow rapidly at a total of 26 per cent in industries including interactive media services, distribution networks and sustainable alternatives in packaged food,” said Joao Luiz Paschoal, consulting practice manager for investor services at Euromonitor International.

Domestic focus for China; US to hone in on LatAm 

China, on the other hand, will shift its manufacturing capabilities to focus on its domestic market, especially in engineering and industrial machinery. Its M&A activity index is expected to grow by only 5.4 per cent – the lowest level of growth in the last five years. 

The US will aim to counter China’s past influence in the Western Hemisphere by focusing on Latin America, with industries such as renewable energy, e-commerce and education leading the way. Fuelled by countries like Brazil, Mexico and Peru, the region is set to achieve 13.7-per-cent growth, the highest globally. 

To compare global M&A attractiveness and learn more about Euromonitor’s methodology, access the full report for free here: https://go.euromonitor.com/white-paper-consulting-2020-MA-Investment-Index.html

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