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Industry News: FDI Down, M&A Deals Up in Singapore

By June 25, 2018July 20th, 2018No Comments
Industry News: FDI Down, M&A Deals Up in Singapore

In its best performance since 2014, Singapore’s H1 global mergers and acquisitions activity reached $54.6 billion, signaling 19.1% growth from $33.8 billion in H1 2017. The growth is on par with global trends, as global M&A deals totaled record highs in Q1, reaching $1.2 trillion in value. Reuters notes that both tax reform in the U.S. and accelerated economic growth in Europe influenced companies’ decisions. But not all of Singapore’s attempted M&A deals came to fruition—largely due to Trump’s intervention. Broadcom Ltd’s $117 billion hostile bid for Qualcomm Inc., a U.S. chip maker company, was blocked by the Trump Administration on grounds of national security. The move was on par with the White House’s continued rhetoric of being technologically outpaced by or losing new technologies to China. Despite Washington blocking the massive deal, Singapore’s 2018 M&A deals are off to a strong start.

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Averages, Domestic M&A Activity Increased in Singapore

Most of Singapore’s impressive H1 was largely driven by a significantly productive Q2. This quarter saw deals reach $21.6 billion, signaling a 76.8% increase from Q1, and a 23.4% increase from Q2 in 2017. But it wasn’t just the monumental deals that stood out; Singapore’s average deal size increased up to $127.1 million in H1. This was a sizable increase from H1 2017 where the average deal size came in at $86.8 million. Despite a domestic transaction downturn of nearly 23%, Singapore’s domestic M&As reach $3.8 billion, a 7.5% increase from H1 2017.

Singapore’s domestic activity was evenly spread across sectors, with the financial, property, and industrial sectors accounting for 75% of domestic M&A deals in H1. $166.2 million came from private, equity-backed M&A deals. Moreover, these types of acquisitions expanded by 13.4%. But it wasn’t all promising; at this point in 2017, Singapore’s international M&A deals had reached $19 billion. This year, that figure fell 11.8% to $16.8 billion.

Foreign Direct Investment from Singapore Down

In 2017, Singapore was fifth out of the globe’s top 20 foreign direct investment areas, totaling $62 billion, according to the 2018 World Investment Report of the United Nations Conference on Trade and Development (UNCTAD). However, its FDI has fallen 19.9% in 2018. This is largely due to a lack of investment in the financial sector, placing it as the fourth-largest FDI recipient behind China, Hong Kong, and Brazil. Remaining unchanged was Singapore’s rank as the 14th largest source of FDI. Its investments dipped 11.79% from 28 billion in 2016 to $24.7 billion just a year later.

Concerning outbound FDI, Singapore was the fifth largest investor for developing Asia. For years 2011 and 2016, it invested $188 billion and $25 billion, respectively. In Africa, Singapore is the seventh largest investor, with investments totaling $17 billion in 2016.