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Vietnam is expected to become second most robust M&A market globally after US

Vietnam Investment Review

Vietnam is a new hotspot for M&A. Photo: unsplash

Vietnam's M&A activities are expected to grow at a speed only second to the United States with hot sectors including construction, distribution networks, manufacturing and public infrastructure, according to the latest Euromonitor M&A Investment Index.

Accordingly, Vietnam's M&A Investment Score is expected to reach 94.6 points in 2021, trailing behind the US (112.5 points) and even exceeding major economies like China and India.

Euromonitor International’s Financial and Investment Services practice developed the M&A Investment Index, reflecting the expected level of investment, activity, and attractiveness of the global M&A market amid macroeconomic and financial shocks. The model covers a total of 314,002 M&A deals from 50 countries and over 150 industries worldwide between 2015 and 2020.

Between 2015 and 2019, China and the US were the two most dynamic M&A markets accounting for 38 per cent of global transactions. However, with the political landscape affecting the global economy, countries are diversifying their supply and value chain strategies away from China to Southeast Asia.

The region’s low borrowing costs and depressed asset values will present acquisition opportunities for businesses from the US and Western Europe. “Countries such as India, the Philippines, and Vietnam are forecast to grow rapidly at a total of 26 per cent in industries including interactive media services, distribution networks, and sustainable alternatives in packaged food,” comments Joao Luiz Paschoal, consulting practice manager for investor services at Euromonitor International.

China, on the other hand, will shift its manufacturing capabilities to focus on its domestic market, especially in engineering and industrial machinery. Its M&A activity index is expected to grow by only 5.4 per cent, the lowest in the last five years.

The US will aim to counter China’s past influence in the Western Hemisphere by focusing on Latin America, with industries such as renewable energy, e-commerce, and education leading the way. Fuelled by countries like Brazil, Mexico, and Peru, the region is set to achieve 13.7 per cent growth, the highest globally.

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