The Asia-Pacific region, ex-Japan, has experienced a slow start to the year in terms of merger and acquisition (M&A) activity. There were 697 deals worth US$124.8 billion announced during the first quarter, down 10.4% by value compared to US$139.3 billion from 817 deals in the same period of 2016.

Despite the slowing activity, regional deal-making remained strong, achieving its third highest-valued first quarter, based on Mergermarket records. As noted in 2016, deal-making was driven by transactions between Asian countries, with intra-regional M&A accounting for 93.3% of the total deal value – the highest first quarter share on record.

The largest deal announced during the quarter was Vodafone Group’s US$12.7 billion sale of Vodafone India to Idea Cellular, which saw the two Indian firms joining forces. The merger of equals marks the largest deal conducted by an Indian company on record, surpassing Tata Steel’s US$11.9 billion takeover of Corus, now known as Tata Steel Europe.

The Vodafone transaction bolstered India’s first quarter M&A value, with 76 deals worth US$18 billion announced, nearly double the 2016 first quarter performance with US$9.2 billion from 110 deals.

New regulations imposed by the Chinese government to restrict large outbound deals was swiftly and inevitably followed by a sharp drop in Chinese dealmakers investing abroad. There were 75 Chinese outbound deals worth US$11.8 billion announced in the first quarter of the year, a steep drop from US$82 billion involving 96 deals in the first quarter of 2016 and from US$42.3 billion in 87 deals in the fourth quarter of 2016.

The new regulations, coupled with increased protectionism from the US and UK, may signal the end of China’s outbound acquisition spree, at least in the short-term.

Meanwhile, Chinese buyout activity has seen an uptick in deal value with 19 transactions worth US$6.3 billion announced so far in 2017, reaching its second highest first quarter on record following 2016, which recorded US$13.3 billion.

Technology has continued to be the most targeted sector as innovation continues to disrupt traditional industries and drive M&A activity. So far this year, five buyouts took place within the technology sector worth US$2.4 billion, accounting for 37.8% of the total first quarter buyout value.