According to GlobalData, transaction activity in the Asia-Pacific (APAC) area, a crucial market for international deal-making, has significantly decreased year over year by 42.2% in February 2023. The number of deals announced in the APAC area decreased from 1,392 deals in February 2022 to 805 deals in February 2023.
China, the largest Asian market for venture capital funding transaction activity, experienced a fall in deal volume of 28.2% year over year in February 2023. India, the second-largest market for VC capital, had a drop in deal volume of 51.8%.
Deal activity decreased by 50%, 45.9%, 56.1%, 35.1%, 61.8%, 58.3%, and 35.3% in markets around the region, including Japan, Australia, South Korea, Singapore, Hong Kong, Indonesia, and New Zealand.
GlobalData lead analyst Aurojyoti Bose said: “The impact of strict COVID-19 policies and tightening regulations on technology companies had an adverse impact on the deal-making sentiments in China. Meanwhile, the prevailing volatile market conditions and macroeconomic challenges seemed to have taken a toll on other key APAC markets.”
There was a decrease in all types of agreements in February 2023, as seen by the decreases in venture finance deals, private equity deals, and mergers and acquisitions deal volume of 41.7%, 38.6%, and 43.2%, respectively.
According to Bose, the fall in deal activity across the major economies in the APAC region underlines the cautious stance taken by businesses and investors in the face of a tumultuous geopolitical environment.
The slow pace of deal-making in the APAC area illustrates the need for all stakeholders to exercise caution and restraint in the coming months, according to Bose.