As published on finews.asia, Friday 3 April, 2020.
Volatility in the financial markets and uncertainty in the global economy arising from the Covid-19 pandemic have impacted investment banking revenues, which saw its revenue pool shrink by 8.8 percent in the last quarter.
Fees generated from mergers and acquisitions (M&A), equity capital market (ECM), and debt capital market (DCM) in Asia Pacific (excluding Japan) reached $5 billion in the first quarter of 2020, or 8.8 percent lower than the same period last year, according to financial markets data and infrastructure provider Refinitiv.
While fees generated by ECM during the quarter, at $1.1 billion, was 22.9 percent higher than the same period last year, DCM underwriting declined 4.8 percent to $2.8 billion, and syndicated loan fees declined 30.6 percent to $560.8 million, said the firm in its Q1 2020 Investment Banking Review. Revenue generated from advisory fees for M&A transactions were the hardest hit, falling by 39.2 percent to an eight-year low of $473.1 million.
China's Citic pocketed 5.3 percent of wallet share, replacing Bank of China at the top for overall investment banking fees during this period. Credit Suisse grew its fees by 106 percent year-on-year to climb from 15th to third in the league table, with 2.2 percent share.
The value of announced M&A deals involving Asia Pacific companies, excluding Japan, reached $189.6 billion during this period, down 2.5 percent in value year-on-year in the lowest first-quarter period since 2014.
Deals in the Financials sector totaled $38.3 billion, or 20.2 percent of market share, up 11.7 percent from a year ago, led by Huishang Bank's $15.3 billion acquisition of four Baoshang Bank branches – the largest Chinese bank acquisition on record and the second biggest-ever bank acquisition involving Asia Pacific.
Equity and equity-related issuances raised a$45.6 billion in the first quarter of 2020, down 9.8 percent from the year before. The largest ECM offering in the region was Beijing-Shanghai High Speed Railway's $4.4 billion raise in January, which was also the biggest IPO globally for the first quarter of 2020.
Primary bond offerings from Asia Pacific-domiciled issuers raised $622.5 billion during the first quarter of 2020, down 2.7 percent in proceeds, but still the second highest-ever first-quarter period after a record start last year.
Asia Pacific investment-grade bond proceeds also hit an all-time high of $358.4 billion, eclipsing the record set during the first quarter of 2019 by 1.6 percent.