Analysts predict an increase in mergers and acquisitions by Chinese companies due to threats from Trump. 'Higher tariffs could potentially expedite the international expansion of Chinese businesses,' suggests a Deloitte analyst.

The number of mergers and acquisitions (M&A) led by Chinese companies could potentially increase due to President-elect Donald Trump's threat of imposing tariffs, which might quicken the international expansion of mainland firms, say industry specialists.

In light of the potential for 60 to 100 per cent duties on Chinese products, companies in the globe's second-largest economy are seeking strategies to decrease dependence on the US. This comes amid a weakened global mergers and acquisitions climate plagued by heightened interest rates and persistent geopolitical conflicts.

"Additional tariffs could accelerate the international expansion of Chinese firms," Stanley Lah, the leader of Deloitte's M&A services in the Asia-Pacific and China, stated. "Chinese businesses might hasten their search for alternative shipping or sales strategies to the US. That message is quite distinct and unambiguous."

He further stated that mergers and acquisitions could provide a faster route for Chinese firms to achieve their goal of enhancing their efficiency in international markets, as opposed to other approaches like establishing sales branches or production centers.

Data from the London Stock Exchange Group indicates a 16.5% drop in Chinese outbound mergers and acquisitions (M&A) deals, amounting to $17 billion this year. This is in comparison to the same timeframe last year. Despite a 59% increase in these deals last year, reaching $27 billion, it is significantly lower than the high of $202 billion seen in 2016.

According to Federico Bazzoni, the CEO of Investment Banking at Vantage Capital Markets, there has been a noticeable recovery in China's outward mergers and acquisitions, particularly in areas favored by Beijing.

"He noticed a resurgence of action in particular industries," he noted, pointing out sectors such as manufacturing, technology, renewable energy like solar power and batteries, and to some extent, consumer goods. "Market values are declining," he stated.

Analysts predict that Chinese companies may increase merger and acquisition actions due to threats from Trump. An analyst from Deloitte suggests that an increase in tariffs could potentially accelerate the global expansion of Chinese businesses.

Industry specialists predict a potential surge in China's overseas mergers and acquisitions (M&A) due to President-elect Donald Trump's proposed tariff threats, which could push mainland businesses towards further internationalisation.

Companies in China, the world's second-biggest economy, are preparing for the potential impact of tariffs on Chinese goods, ranging from 60 to 100 per cent. They are seeking strategies to lessen their dependency on the United States. However, this comes amid a fragile global merger and acquisition climate, plagued by high interest rates and persistent geopolitical conflicts.

"An increase in tariffs could potentially expedite the globalization efforts of Chinese firms," stated Stanley Lah, who leads the Mergers & Acquisitions services for Deloitte in the Asia-Pacific and China regions. "Chinese corporations may start to rapidly explore other options for shipping or trading with the United States. This message is very clear and strong."

He further stated that mergers and acquisitions could offer a quicker answer to Chinese firms' goal of improving their efficiency in international markets, as opposed to greenfield investments like establishing sales outlets or production plants.

Data from the London Stock Exchange Group has revealed that Chinese outbound mergers and acquisitions (M&A) transactions have dropped by 16.5% to $17 billion this year, in comparison to the same timeframe in the previous year. However, the previous year saw an increase of 59% year on year, reaching $27 billion. This is still significantly lower than the $202 billion high in 2016.

There has been a noticeable recovery in China's outbound Mergers and Acquisitions (M&A), particularly in industries favored by Beijing, says Federico Bazzoni, Chief Executive Officer of Vantage Capital Markets' investment banking division.

"He noted a resurgence of operations in certain industries," he stated, pointing out manufacturing, technology, renewable energy like solar power and batteries, and "somewhat" in consumer goods. "Prices are decreasing."

Special Report | Citigroup's CEO Jane Fraser speaks on the lasting appeal and pivotal role of Hong Kong

Despite the possibility of a trade war, it will not affect the US bank's growth strategy in Asia, or diminish the significance of Hong Kong, Fraser shares in an exclusive discussion.

Jane Fraser, the worldwide CEO of Citigroup, holds a deep affection for Hong Kong. Although her individual association with the city doesn't span as long as the company's – a 122-year history – it does encompass several decades.

Fraser was one of the 300 international financial experts who assembled in the city for a three-day conference, which ran from November 18 to 20, to exchange ideas and talk about shifts in the industry.

It goes without saying that the possibility of imposing substantial tariffs on Chinese products if Donald Trump resumes presidency was a hot topic of discussion. Although these possible tariffs could change the course of global commerce as businesses shift their production away from mainland China, Fraser doesn't envision this impacting Citigroup's strategy in Asia.

"Our growth in the area won't be impacted," she stated. "Citi enjoys the advantage of having a global reach and footprint in numerous locations, and a history of over 120 years in Hong Kong. Additionally, we have a long-standing presence in mainland China, India, Japan, Singapore, among various other markets."

Rental returns in Hong Kong have reached a pinnacle not seen in over a dozen years due to an increase in skilled workers and reduced costs. Experts predict the trend will continue to rise in 2025 with more industry experts flocking to the city and individuals delaying buying homes.

Analysts report that the income from renting residential properties in Hong Kong has reached its peak in over twelve years. This trend is expected to continue for the next couple of years, fueled by strong interest from new residents and a decrease in home loan expenses.

The city's average rental return slightly increased by 0.04 percentage points, reaching 3.47 percent at the end of September, which is the highest it's been in roughly 12.5 years according to the Centa City Rental Index Yield from Centaline Property Agency. Over the five months leading up to September, this measure rose by 0.38 percentage points.

Out of the 138 properties monitored by Centaline, 22 of them had a rental yield surpassing 4% in September, which is an increase of four properties from August. The rental yield for Tak Bo Garden in Kowloon Bay reached 5.16%, marking the first instance a property exceeded 5% since January 2012, according to data from Centaline.

"Rental returns have nearly reached their highest point this year and could experience a minor drop due to seasonal factors," stated Yeung Ming-yee, a high-ranking associate director at Centaline. "They are expected to stabilize at 3.4 per cent by the year's end."

The pace of leasing activity could pick up following the Lunar New Year in 2025, a period generally associated with increased activity, and it's expected to continue its upward trend over the subsequent two to three years, although at a reduced rate, she mentioned. The primary factors fueling this demand will be individuals delaying home purchases due to fears of declining prices, and newcomers brought in through the city's talent program, she further noted.

Units of 430 square feet or smaller saw a return of 3.7% in September, an increase of 0.6 percentage points compared to the same time in 2023. This marks the highest yield in over a decade, as per the data provided by the Hong Kong Rating and Valuation Department and reported by Ricacorp Properties.

The report also noted an increase in yield for apartments ranging from 431 to 752 square feet, with a slight increase of 0.1 percent, bringing it up to 3.2 percent in September.

The progress of Bitcoin towards the unprecedented $100,000 mark pauses as cryptocurrency investors display prudence. An analyst noted that Bitcoin has been significantly over-purchased since the electoral period.

The value of the digital asset plummeted to as little as US$95,776 on Sunday, having nearly reached the significant milestone of six figures just two days earlier on Friday. The asset had difficulty maintaining a value around US$97,000 early Monday in Asia, casting a negative outlook on the broader cryptocurrency market.

"Concerns are rising among investors that there might be a pause now that it has essentially reached the US$100,000 mark," stated Matt Maley, head market analyst at Miller Tabak + Co. "It's worth mentioning that the optimism related to bitcoin is becoming intense."

The anticipated administration of Trump is seen as a positive influence for cryptocurrency throughout Wall Street and further afield. The total worth of the digital-asset market has witnessed a rise of approximately US$1 trillion following the Republican's triumph on November 5.

Trump has committed to more amicable regulations and has vowed to establish a national reserve of bitcoins, though the schedule for execution and the practicality of the bitcoin stash are still matters of uncertainty.

Hong Kong's stock market is nearing a two-month low, with New World seeing a decline following its removal from the Hang Seng. The city's stock market turnover has decreased by roughly 5% compared to the average of the past 30 days.

The Hang Seng Index experienced a 0.4 per cent fall, closing at 19,150.99, thus continuing the 1 per cent slide it saw last week. This marks its lowest point since September 25. Meanwhile, the Hang Seng Tech Index also decreased by 0.3 per cent.

The city's stock market experienced approximately a 5 per cent decrease in turnover compared to the 30-day average, as per the data from Bloomberg.

Indices on the mainland also saw a slight decline: the CSI 300 Index dropped by 0.5 per cent while the Shanghai Composite Index decreased by 0.1 per cent.

The recent surge in the Hong Kong market has lost momentum following China's less than satisfactory fiscal stimulus, which has left investors feeling disillusioned, in addition to concerns over increased tariffs from the US. Analysis of recent profit reports indicates that public companies continue to struggle with low domestic demand in China, alongside ongoing real estate issues. As of last Friday, the Hang Seng Index has decreased by 17% from its peak this year, which was in October.

In 2024, Apple's CEO, Cook, embarked on his third journey to China amidst a decline in iPhone sales and ambiguity around AI. At the International Supply Chain Expo held in Beijing, the CEO praised the crucial role played by Apple's Chinese collaborators.

In a brief video footage released on Monday, Cook stated that he holds Apple's Chinese collaborators in high regard. "Without them, what we do wouldn't be possible," he mentioned in reply to a query from a web-based news platform linked with the state-owned China Central Television.

Apple didn't reveal Cook's travel schedule. The company didn't immediately reply to a comment request on Monday.

The recent visit of Cook to China emphasizes the significance of the market for Apple, despite the firm's efforts to decentralize its production network from the country in response to political uncertainties.

The surge in bitcoin has benefited Boyaa, a Chinese game developer, leading to a ninefold increase in their shares in Hong Kong. This company, known for creating online card and board games, began their investment in digital currencies back in 2023.

Boyaa, headquartered in Shenzhen, has augmented its Bitcoin investments in the past year. By November 21, the company possessed 2,688 Bitcoin units, which resulted in an estimated profit of around $120 million, as stated in their most recent financial statement.

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Bitcoin's progression towards an unprecedented US$100,000 mark halts due to caution among crypto investors.

On Monday, Bitcoin experienced a 1.4% increase, reaching a value of US$98,426.57. This value is near its all-time high of US$99,420.01, achieved on Friday. The virtual currency has seen a staggering 135% increase in value this year, stopping just short of the US$100,000 milestone.

Huawei is targeting 100,000 applications for its indigenous HarmonyOS Next, in preparation for the launch of Mate 70. Up until October 22, during its public beta phase, HarmonyOS Next had more than 15,000 original apps and services.

"Reaching 100,000 applications showcases the development and readiness of the HarmonyOS ecosystem to cater to customer demands," stated Eric Xu Zhijun, the rotating chairman of Huawei, at a conference on Saturday. "This will be a critical goal for the ecosystem in the forthcoming six months to one year."

Xu stated that HarmonyOS Next already supports the most commonly used 5,000 apps, making the ecosystem fundamentally functional. However, he pointed out that there are still numerous infrequently used but crucial apps that need to be developed for the platform.

"We require additional programmers, collaborators, and community influencers to collectively advance HarmonyOS Next into the 'veins' of the app industry," Xu addressed the crowd.

The existing digital environment comprises 18 types of applications that cater to the everyday requirements of users. This includes popular social media platforms such as Tencent Holdings' WeChat and ByteDance's Douyin, and also a few public services like the forthcoming official tax app from China, as stated by Xu.

Paul Chan announces plans for Hong Kong to enhance financial changes to support Chinese businesses

In the face of global political conflicts, the city has the capacity to assist mainland companies that are finding it difficult to secure funding overseas, states the financial secretary.

Hong Kong intends to implement additional financial changes to assist mainland Chinese corporations struggling with investment and funding difficulties in Western markets, according to the city's finance chief on Monday. Simultaneously, a high-ranking central government representative in Hong Kong appealed for backing for "integrated development".

"Given these conditions, Hong Kong plans to introduce more changes to its securities and financial sectors to draw in additional national and international funding. This move supports the growth requirements of projects and enterprises in the Greater Bay Area."

Qi stated that the Greater Bay Area, which includes Guangdong, Hong Kong, and Macau, houses around 5,000 public companies. This area has been instrumental in contributing to the development of essential partnership platforms, enhancing the financial linkages between the two regions, and fostering financial and trade cooperation between them.

Chan and Qi addressed the audience at the 2024 Summit of Listed Companies in the Guangdong-Hong Kong-Macau Greater Bay Area, held in Hong Kong.

Qi expressed his hopes that companies registered in the Greater Bay Area will utilize the benefits offered by Hong Kong, especially as a launchpad for global growth. He encouraged these companies to not only strengthen their presence in European and American markets but also to collaborate in investigating potential opportunities in burgeoning markets such as Asean, the Middle East, and Latin America.

HSBC report identifies Singapore and Hong Kong as leading investment and business markets in Asia. Singapore is the preferred relocation spot for affluent business individuals, however, Hong Kong didn't make it to the top 10.

According to a report by HSBC, affluent investors planning to relocate or shift their investments within the next year are primarily choosing Singapore as their preferred destination in Asia, over Hong Kong.

Close to 70% of wealthy investors have expressed interest in transferring all or a portion of their assets to a different location within the next year, as per the Global Entrepreneurial Wealth Report published by a UK bank on Monday. Switzerland was the preferred choice, with Singapore coming in fourth place and Hong Kong in seventh.

Approximately 55 per cent are contemplating relocating themselves to a different place, with Singapore being their preferred choice. Hong Kong did not manage to rank within the top 10 preferred destinations.

Singapore has been ranked as the leading financial hub for wealthy business owners to invest their resources and carry out business operations in Asia for the upcoming year.

HSBC conducted a poll involving 1,882 enterprise proprietors from countries including the US, UK, France, Hong Kong, India, mainland China, Singapore, Switzerland, Taiwan, UAE, Japan, and Australia in the months of July and August. The participants in this survey are each in possession of a minimum of US$2 million in assets available for investment, with a third of them boasting a minimum of US$100 million.

"The study revealed that Hong Kong and Singapore continue to be the most attractive markets for affluent people in Asia," stated Wilson Chan Fung-cheung, the associate director of the MBA programme at City University in Hong Kong. "Hong Kong, being the access point to mainland China, still provides numerous business prospects and potential for growth."

Oppo, a Chinese smartphone manufacturer, is planning to increase production in Indonesia, targeting the Southeast Asia market. While Oppo already utilizes just over the 35% of local smartphone parts mandated by Indonesian regulations, the company aims to expand further.

Approximately 36 to 37% of the smartphone parts that Oppo procures for its Tangerang-based Indonesian plant are domestically sourced. These include batteries, packing materials, adaptors, and USB cables, as stated by Jefry Firman de Haan, the director of Oppo's Indonesia Manufacturing Centre.

The percentage of components marginally exceeds the 35 per cent minimum established by Indonesia for smartphone manufacturers under its domestic component level (TKDN) regulation. Fulfilling this requirement is necessary for companies to market their phones in the nation, which boasts the most robust economy in Southeast Asia.

Nonetheless, Oppo has ambitions to progress even more, as stated by de Haan. "We're in search of reliable providers for all our components, engaging in close discussions and collaborations with the Ministry of Industry as well as local authorities to identify the best suppliers and vendors for our needs," he expressed during a company-sponsored media tour of the factory on Tuesday.