19 September 2018

Chinese firms eye South Asia for outbound deals, E&Y says

Chinese companies are ramping up investment in South Asia, encouraged by an improving global economy and a strengthening renminbi, accounting firm Ernst & Young (E&Y) said.

“The top three outbound investment destinations for Chinese companies are Vietnam, Myanmar and India,” said Judy Tsang, managing director of transaction advisory services, citing a survey.

The United States and Brazil are also on their radar screens, she said.

Most of the outbound investment is going to Vietnam in the new energy and handset manufacturing sectors, driven by lower production costs. Myanmar has been drawing investors to its utilities and gas-related industries, Tsang said.

“This is just a start for Chinese outbound investment. We expect a rising trend,” Bernard Poon, managing director of transaction advisory services for Hong Kong and Macau, told a press conference Tuesday.

“We see more outbound mergers and acquisitions deals in financial services, construction, diversified industrial products and in the automotive sector in the coming 12 months,” he said.

About 32 percent of Chinese companies in the survey expect to undertake M&A deals in the coming 12 months, the most since October 2011. The figure compares with 11 percent during same period last year. 

Meanwhile, about 70 percent said they plan to make capital investment rather than optimizing, raising or preserving capital assets.

The survey, published twice a year, polled more than 1,600 executives in 70 countries in September. More than 120 were from Greater China.

The respondents came from more than 20 sectors and nearly 70 percent are listed companies, E&Y said.

– Contact HKEJ at [email protected]



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