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A survey conducted by PricewaterhouseCoopers (PWC) showed that respondents remained optimistic under the credit crunch, but the pace of regulatory development remains a concern.
According to the report Going for Growth in Asia: Navigating the Way, 44% of respondents have said that the credit crisis could actually increase the volume of M&A deals in Asia. However, they have also observed that regulators across much of Asia may be putting further market liberalisation on hold due to the contagious nature of the global credit crunch. For example, Shang Fulin, chairman of the China Securities Regulatory Commission, has recently announced that the government is preparing to launch a number of new financial tools including index futures, margin trading and securities lending which could act as a spur for the markets.
In April, an executive meeting of China’s State Council, presided over by Premier Wen Jiabao, approved in principle two sets of draft regulations: the regulations on risk handling at security firms which became effective in April, and the regulations on the supervision and management of security firms will become effective on June 1.
Fulin said the new rules are of great value for a stable and healthy capital market.
The PWC report also showed that in 2007, China was the second most active country in Asia for M&As after Japan, with deal volume at US$16.2 billion in 2007, up from US$11 billion in 2006. Though concern over regulatory issues exists, Christopher Chan, PricewaterhouseCoopers transactions partner, said that Chinese companies were the most bullish, with 50% believing they will undertake significant M&A deals this year, and 71% in the next five years.
Matthew Phillips, head of PricewaterhouseCoopers financial services M&A practice in China, commented: “If there are any doubts that the balance of financial power is swinging towards Asia, one only has to look at the FT Global 500 index. Four Chinese financial services companies – ICBC, China Life Insurance, China Construction Bank and Bank of China – are in the top 21 global companies by market capitalisation.”
See also:
New Merger Control Guidelines Clarify Procedures and Information Required for Merger Filings in China
Asian Markets Shape International Capital Markets