What’s the Matter With Chinese Private Equity?

September 26, 2019 | Headlines, News, Private Equity

Chinese dollars have dried up this year due to macro-economic forces

Chinese private capital dealings slumped dramatically in the first half of the year. A new report from the Emerging Market Private Equity Association reveals startling figures on the state of the Chinese market.

The report shows that private capital investments slumped by nearly 33%. The market saw a decline of $15.1 billion in the first half of 2018 to $9.8 during the first six months of 2019. The number of deals also dried up. The report shows the number of deals fell to 322 to 582, year-over-year.

Private Capital Falls As “Expected”

The EMPEA said that the drop “was expected given the sheer amount of capital raised in 2018, particularly in Emerging Asia and Latin America. In addition, the group noted that this is part of a larger trend for emerging markets. The report shows respective declines in private equity and venture capital 10% and 32%, during the same periods.

The trade association attributed the slowdown to more conservative institutional investors, advisors and fund managers. The “slowdown in private capital investment activity in the first half of 2019 was more pronounced amid rising trade tensions between major economies and a more uncertain global economic outlook,” the report reads.

The 2019 Mid-Year report also tackles a number of different trends in global energy, fintech, and healthcare.

However, the decline in Chinese private capital is the gain of other regions.

“Moreover, capital invested in several geographies, including India, the Middle East, and Latin America, actually increased year over year,” the company said in a press release.

Those results aren’t surprising given a recent report from Hedge Fund Research (HFR). The company’s Q2 fund report showed that emerging markets continue to outperform U.S. equities in 2019. AUM at emerging market hedge funds hit a record $ 239.3 billion at the end of Q2 2019.

 

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