China Transactions Insights - Spring 2020

The coronavirus pandemic severely disrupted Chinese businesses during the first few months of the year, as demonstrated by a 6.8% decline in China’s GDP for Q1 2020.

China also recorded declines in industrial output (-8.4%), retail sales (-19.0%), foreign trade (-6.4%) and foreign direct investment (-10.8%) in Q1 2020.¹ However, as many Chinese businesses, factories and people return to work, economic indicators and financial markets are beginning to show signs of recovery.

Capital markets activity for Chinese companies also felt the impact of COVID-19, as market volatility and uncertainty slowed the pace of both U.S. and Hong Kong IPOs of Chinese companies through the first four months of the year.²

Going-private transaction activity for U.S.-listed companies based in China remains below the peak level seen in 2016. However, 2020 has the potential for a substantial uptick in deal value, as companies with pending going-private proposals represented approximately USD 13 billion in total market capitalization as of May 7, 2020.²


Sources
¹ China National Bureau of Statistics and China Ministry of Commerce
² SEC filings, company press releases and S&P Global Market Intelligence as of May 7, 2020