The number of global merger and acquisition (M&A) deals declined for the first time since 2010 last year amid escalating trade tensions and political instability.
Geopolitical tensions took their toll as Chinese purchases of U.S. firms plummeted by 94.6 percent, falling to a value of $3 billion from a record $55.3 billion in 2016, according to research released by Mergermarket on Thursday.
China instead turned its attention to Europe, the data suggested, as Chinese M&A bids in the region soared by 81.7 percent to $60.4 billion.
Elsewhere, the number of cross-border M&A deals fell by 6.6 percent. After steadily rising for close to a decade, the total number of deals struck globally fell to 19,232 from 19,974.
While the number of deals fell, individual deals rose in value, with the average deal size reaching its second highest value on record at $385 million and total M&A value rising 11.5 percent to $3.53 trillion.
Jonathan Klonowski, Mergermarket’s EMEA research editor, told CNBC’s “Squawk Box Europe” on Wednesday that he expected geopolitical tensions to continue impacting the number of deals finalized in 2019.
“If you look at the protectionist activities of governments, they are going to make these large deals harder to complete,” he said. “The majority of (the spending) increase we saw this year was domestic activity rather than cross-border activity, so that defensive domestic consolidation is possibly what we’ll see more of in the coming year.”