Corporate Financing Analysis - LatAm M&A Down, But Brazil Still A Chinese Favourite - 02 OCT 2017


After returning to growth in 2016 on a wave of positive sentiment towards emerging markets more broadly ( see ' LatAm M&A To Continue Its Return From Low Base ' , September 28 2016), the Latin American M&A arena has seen announced deal activity in the region slow once more in 2017 as the developed states play catch up and regions such as Latin America lose their sheen. We note that the only exception to this rule has been regional powerhouse Brazil which has remained a favourite market for inbound dealmaking for acquirers from across the globe. But with Brazil undergoing an economic growth slowdown; the local currency showing signs of long-term weakness; and ongoing political instability rocking the country, even activity levels in the region's largest economy may begin to drop off soon.

In terms of the region's advantage in terms of economic growth over its peers in developed markets, BMI forecasts shows that that pull is starting to run thin. BMI's Global Team is forecasting global real GDP growth to turn out at 2.1% in 2017, which equates to the second-highest growth figure since 2010. Thereafter, however, we believe that the market is set to give way to 1.8% expansion in the ensuing years. That being said, the vast majority of recent changes to our real GDP growth forecasts for individual developed economies have been to the upside, which marks a real turnaround from the largely bearish tone in growth sentiment seen across the course of 2016. In sum, the headwinds which have rocked growth in developed markets over recent years have died down somewhat and have left emerging markets less appealing than they recently were to outside investors in search of alpha.

2017 To-Date: The Story So Far

Dragging Its Feet
Announced LatAm-Focused M&A By Deal Value, USDmn
Source: Bloomberg

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