Why Covid-19 did not hurt tech appetite for Asian investment

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ompanies have reason to be sceptical about investment in Asia in general, and in China in particular. In China, Beijing is tightening its grip on its thriving tech industry, forcing companies such as Alipay to hold off on public debuts, launching probes against companies such as Didi Chuxing, and restricting domestic start-ups’ ability to list abroad.

However, the question is whether things really are as bad as they may seem. Take mergers and acquisition (M&A) deals for example; given the pandemic, it should not come as a shock that 2020 was not the best year. A GlobalData review reports that $2.87bn worth of M&A deals were announced last year across the globe, a decline of 5.4% from 2019. Deal volume also posted a year-on-year decline of 4.8%. However, investment in Asia tells a very different story.

Here is where it gets interesting: the same report notes that while deal activity remained muted across most regions, Asia-Pacific was the only region that managed to witness growth in deal value and volume.

Total deal value and volume for the Asia-Pacific market increased from 6,594 deals worth $486bn in 2019 to 7,621 deals worth $666bn, up by 15.6% and 37.0% respectively. The region’s technology sector led the way with a 121% growth in tech deal value and a 45% jump in deal volume. GlobalData puts down this success to the fact that several Asia-Pacific economies managed to control the spread of Covid-19 and recover relatively quickly compared to the rest of the world.

China in particular led the way on this front, and accordingly led M&A deal activity during the first two quarters of 2020 when the pandemic and related uncertainty was gaining strong momentum. This, contrary to any pandemic-related misgivings, could suggest that expanding tech companies looking to up Asia investment would do well to set up a base in China.