CARI Captures Issue 509: Mergers and acquisitions in Southeast Asia hits US$19 billion in first half of 2021, fueled by tech sector

Mergers and acquisitions in Southeast Asia hits US$19 billion in first half of 2021, fueled by tech sector

(30 June 2021) Mergers and acquisitions (M&As) in Southeast Asia hit US$19 billion in the first half of 2021, fueled primarily by the region’s booming tech sector. M&As rose by 114% compared to 2020, and it is projected to reach US$75 billion by the end of 2021, well above the $17 billion recorded in 2020 and $23 billion in 2019. One of the biggest deals involved Indonesian tech giants Gojek and Tokopedia merging together to create a platform worth more than US$18 billion. Digital banking and lending services were the main sectors fueling M&As in the first half of 2021. This included the acquisition by Sea, the gaming and ecommerce platform, of Indonesia’s Bank Kesejahteraan Ekonomi in January 2021.

Thailand, the Philippines and Malaysia had combined outflows of US$2.7 billion from their equities in April-June period of 2021

(02 July 2021) Southeast Asian countries such as Thailand, the Philippines and Malaysia had combined outflows of US$2.7 billion from their equities in the April-June period of 2021. This was the largest exodus from their equities since the quarter ending September 2020. This exodus was fueled by investor fears about the slow vaccine rollout in many Southeast Asian countries. Many of these countries are also dealing with new variants of COVID-19. Indonesia was the only major market in Southeast Asia where foreigners were net buyers of its equities, with US$345 million net inflow in the second quarter. Investors are instead shifting their money to regional bonds due to attractive yields. Vaccine rollouts in ASEAN are expected to be extensive in the second half of 2021, which will allow gradual reopenings, therefore improving economic growth.

Viet Nam’s GDP grows by 6.61% on the year in April-June period

(29 June 2021) Viet Nam’s GDP grew by 6.61% on the year in the April-June period of 2021, fueled by strong exports of smartphones and other products. The economy expanded by 5.64% in the first half of 2021, making a jump from 1.82% in the same period in 2020. Exports to the United States rose by 42.6% in the first half of 2021, while overall exports rose by 28.4% to reach US$157.63 billion. The Delta variant of COVID-19 slowed operations since the beginning of April 2021 at some factories in the northern provinces of Bac Giang and Bac Ninh, which play central roles in supply chains. While Viet Nam has has been relatively successful in containing COVID-19, cases are currently rising in areas such as Ho Chi Minh City. As well, Viet Nam’s sluggish vaccine rollout has created uncertainty in the economy.

Government to introduce tighter COVID-19-related restrictions in Java and Bali to arrest new wave

(01 July 2021) The Indonesian government will introduce tighter restrictions in Java and Bali in order to arrest a devastating second wave of COVID-19. The new restrictions will begin from 03 July 2021 to 20 July 2021. The new Java-Bali restrictions will apply to a total of 122 cities and regencies — including the capital, Jakarta — with the target of reducing the daily new cases to below 10,000. The new restrictions will stipulate working from home, the closure of shopping malls, schools and places of worship, and banning dining-in at restaurants. The government will also provide social assistance to the needy during this period of new restrictions in order to protect the middle to lower classes. The government has forecasted growth of 4.5% to 5.3% for the year of 2021.

Singapore’s housing market slows in April-June 2021 quarter, after return of lockdown measures eased price growth

(02 July 2021) Private property values in the April-June 2021 quarter increased by 0.9% from the previous quarter, when they had risen by 3.3%. This is the first time price growth slowed in five quarters. This slowdown in price growth was driven largely by stricter social-distancing measures imposed temporarily in May 2021 to curb a Covid-19 outbreak, and it is believed demand may go up again. Singapore’s property market has been heating up over the past year as buyers take advantage of low interest rates and expectations that prices will climb further after the economy recovers. While it is believed that authorities may impose cooling measures for the first time since 2018, the central bank stated this week that the property market isn’t overheated yet.


Singapore’s unemployment rate falls to 2.8% in May 2021 from 2.9% in the previous month

(01 July 2021) According to statistics released by the Ministry of Manpower’s (MOM), Singapore’s unemployment rate fell to 2.8% in May 2021 from 2.9% in April 2021. The jobless rate for citizens fell to 4% in May 2021 from 4.1% in April 2021, while the rate for residents dropped to 3.8% from 3.9%. Singapore’s unemployment rate peaked in September 2020, and has remained flat or declined month-to-month since. Although the Singapore Manpower Minister stated that the downward trend in the unemployment rate was a ‘good sign’, authorities’ optimism is tempered by the possible resurgence of the virus globally. The ministry has been releasing monthly unemployment figures since July 2020. Previously, the rates were published quarterly.

Malaysia tightens COVID-19 related restrictions in dozens of sub-districts across Selangor state and Kuala Lumpur

(01 July 2021) The Malaysian government will introduce tightened COVID-19-related restrictions in dozens of sub-districts in Selangor state as well as several localities in the capital Kuala Lumpur. Under the new restrictions, people staying in districts such as Petaling Jaya and Klang must remain at home from 03 July to 16 July 2021. Only one person from each household will be allowed to leave the house to purchase essential items. Malaysia posted 6,988 new COVID-19 cases on Thursday, with Selangor and Kuala Lumpur contributing more than half the recorded infections. Airports and docks will be allowed to resume operations, while public transport will be allowed to operate at 50% capacity. People working in essential services or carrying out government duties will be exempted from the new restrictions.

RCEP Monitor

Australia’s mining and energy exports expected to hit record high of US$310 billion this financial year
(28 June 2021) Australia’s mining and energy exports are expected to hit a record high of US$310 billion this financial year, unholding the national economy amidst a trade spat with China as well as the global pandemic. Forecasts for energy and resource export earnings are expected to further rise by 7.7% to US$334 billion next financial year, boosted by projected infrastructure spending globally. A surge in demand for iron ore, Australia’s biggest export, pushed the price of the commodity to a record $US230 a tonne, as aggressive infrastructure-focused stimulus programs in China fuel booming demand for the steel-making raw material, alongside constraints in global seaborne supply from Brazil. However, the effects of the pandemic on global energy demand as well as Chinese restrictions on Australian exports meant that Australian coal miners lost a combined US$20 billion in the value of their exports over the past year.

Business confidence for Japanese manufacturers improves in second quarter amidst improving global demand
(02 July 2021) Business confidence for big manufacturers in Japan improved in the second quarter of 2021 to hit a two-and-half-year high. This indicated that a recovery in global demand was helping the Japanese economy emerge from its COVID-19-induced downturn. According to the Bank of Japan, the headline index for big manufacturers’ sentiment jumped to plus 14 from plus 5 in March 2021, marking the fourth consecutive quarter of improvement and posting the highest level since December 2018. Service-sector sentiment also turned positive for the first time in five quarters. An index gauging big non-manufacturers’ sentiments stood at plus 1, against -1 in the previous survey, marking the highest reading since March 2020. Japan’s economy shrank by an annualized 3.9% in the first quarter of 2021, and is believed to have only grown modestly in the April-June period.

China on track to overtake Japan as world’s largest importer of liquified natural gas
(02 July 2021) China is on track to overtake Japan as the world’s largest importer of liquified natural gas (LNG). According to analytics firm Rystad Energy, Chinese LNG imports are projected at 75.5 million tons in 2021, edging out Japan’s 75.1 million tons. Japan had been the world leader in LNG purchases for the past half century, but a maturing national market means that Japanese utilities and gas companies have shortened LNG contracts at smaller volumes. Concurrently, Chinese deals are expanding along with its economy, with some purchasers agreeing to LNG contracts lasting over a decade with substantial import volumes. Japan is now leading the way in developing ammonia as a next-generation fuel.

Leave a Reply

Your email address will not be published. Required fields are marked *