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India bright spot on deal-making landscape; healthcare makes the cut

India and Japan are two bright spots in Asia’s “supremely interesting” markets, JPMorgan’s Filippo Gori said at the bank’s Global China Summit on Thursday, referring to the region’s equity as well as deal-making landscape.

“You have Japan, which is on fire. India, which is very in high demand,” Gori, co-head of global banking at JPMorgan, told CNBC.

Japan’s Nikkei 225 stock index as well as India’s Nifty 50 have climbed nearly 26% over the past year, according to LSEG data.

While mergers and acquisitions activity declined globally in 2023, Japan’s deal value rose 23% from a year ago to about $123 billion, Bain & Company said in its Japan M&A report. “Japan’s economy is uniquely well positioned for growth in M&A,” the report said.

Sentiment on the Indian market was bullish, with most dealmakers expecting improvement in 2024, Bain & Company analysts said.

Last year, the M&A deal value in India stood at $136 billion, a 27% drop for a year earlier, which was in line with the global decline in M&A activity, according to Deloitte’s India M&A trends report. “Continued business and investor confidence in India could pave the way for a recovery in deal values in the country,” the report said.

Countries such as India and Japan have also been benefiting from the “China Plus One” strategy, as investors look elsewhere in the region to park their money amid escalating U.S.-China tensions.

Companies seeking to expand their manufacturing footprint in India will drive M&A activity in the country: “This can be attributed to the China Plus One reconfiguration of global supply chains and favourable government policies, such as the Production Linked Incentive scheme that promotes manufacturing in India,” Deloitte said.

U.S. tech giant Apple shifted some of its production to India after stringent Covid controls in China disrupted its operations there, with around 14% of its iPhones reportedly being made in India now.

Dealmaking activity could be focused in the AI sector: Gori said artificial intelligence has the potential to add trillions of dollars to the global economy by 2030. PwC said AI could contribute up to $15.7 trillion to the global economy in 2030.

“So there is a lot of interest. Whether it will drive much dealmaking activity in this part of the world, I think we need to see certain dynamics. Geopolitics could play a role into that so I think it’s a little bit too early to say,” Gori said.

“Healthcare for sure and renewables for sure, will drive a lot of activity,” he added. NBC Connecticut

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