Global trade is entering a dry period as hot inflation and the stock markets are preventing the thirst of many corporate boards from growing through acquisitions.
Russia’s invasion of Ukraine in February and fears that the recession was imminent had a major impact on merger and acquisition (M&A) activity in the second half. The number of contracts announced decreased by 25.5% year-on-year to $ 1 trillion, according to Dealogic data.
“Companies are still stuck in M&A in the short term as they are very focused on the impact of the economic downturn on their business. The time for cooperation will come but I do not think it is,” said Alison Harding-Jones., head of EMEA M&A for Citigroup Inc.
M&A operations in the United States fell by 40% to $ 456 billion in the second quarter, while Asia Pacific dropped by 10%, Dealogic data showed.
Europe is the only region in which trade has not been disrupted. Employment increased by 6.5% in the quarter, mainly driven by the hustle and bustle of private equity agreements, including a $ 58 billion euro building in the Italian infrastructure Atlantia.
“We are worried about the back half of the year but it is still possible,” said Mark Shafir, global M&A head at Citigroup.