Pending M&A outflows for EUR and CNY, inflows for USD - Nomura

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Feb 3, 2016.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

    Oct 7, 2015
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    FXStreet (Delhi) – Research Team at Nomura, notes that the net pending cash flows for the US fell by around $40bn in January 2016 after reaching a high of $160bn in December 2015.

    Key Quotes

    “Importantly, the US pipeline may be deceptively high because of how the SABMiller Anheuser Busch inBev (ABI) deal is calculated (Dealogic recognizes the parent ownership to be the eurozone for ABI, so EUR outflows may be similarly overstated since October).

    The USD pipeline was strongly supported in January by two mid-sized deals:

    1. The planned acquisition of US-based General Electric Co.’s appliances business by Qingdao Haier Co, a Chinese-listed manufacturer and distributor of household electrical appliances ($5.4bn). The closing of the transaction is subject to regulatory approvals in China and the US, and Haier shareholders’ approval (completion is expected in Q2 2016).

    2. Dalian Wanda Group Ltd. announced its acquisition of Legendary Entertainment Group Inc., a U.S.-based global media company ($3.5bn).

    Net pending outflows of CNY remained large in January (-$47bn), driven primarily by the two USD-bound deals mentioned above in addition to Zoomlion Heavy Industry Science & Technology Co Ltd.’s potential acquisition of Terex Corp (U.S.-based equipment manufacturer) ($3.3bn).

    In summary, EUR, CNY, CAD and JPY all have negative expected cash flows from net pending M&A activity, with EUR the most negative (while still likely overstated by the ABI deal by $70.2bn), followed by CAD, CNY and JPY. We still estimate net JPY outflows from M&A activities, but the estimated pending outflows are currently the smallest since January 2015.”
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