2016: Year of big deals and milestones
By Alfred Romann
09 January 2017

HONG KONG (China Daily/ANN) - From the launch of the Asean common market to mega Chinese M&As, 2016 had its fair share of epoch-making events.

Among the major news events last year, 2016 was marked by Britain’s vote to exit the European Union, Donald Trump winning the United States presidential election, weaker but continuing economic growth in Asia, poor stock market performances and outbound Chinese acquisitions breaking new records.

Businesses in Asia not only had to deal with a strong dollar and a weaker yuan but also with outflows of currency from most markets in the region. Political scandals and bankruptcies in South Korea punctuated a year marked by sometimes opposing trends and no shortage of insecurity.

Here is a month-by-month breakdown of some of the most significant business stories from the region in 2016.

January

The 10 members of the Association of Southeast Asian Nations (Asean) officially launched the Asean Economic Community on the first day of 2016, taking a significant step toward the creation of a unified market of more than 600 million people.

Markets started the year on rather shaky ground with a global sell-off spurred by a 7 per cent slide in markets in China, as well as spikes in the price of gold and bonds. Oil prices started making their way back toward the US$40 mark, peaking at US$38 on January 4. Chinese markets recovered their vigor a few days later but did not make up the losses throughout the year.

China’s GDP growth slipped to its slowest pace since 2009. Despite fluctuating numbers, however, economic growth in the country was expected to reach 6.7 per cent at the end of 2016, a little over the target of 6.5 per cent.

Bucking a trend, Indonesia lowered its benchmark interest rate for the first time in 11 months. Bank Indonesia would go on to cut rates five more times through the year.

Meanwhile, the Chinese-backed Asian Infrastructure Investment Bank (AIIB) started operations with 57 countries signed up and capital of US$100 billion to invest in infrastructure across the region.

Dalian Wanda Group, run by Chinese billionaire Wang Jianlin, purchased US movie studio Legendary Entertainment for US$3.5 billion on January 12. The largest China-Hollywood deal to date was only the first in a series of deals that Wang and his conglomerate announced throughout the year.

February

China National Chemical Corp, or ChemChina, announced plans to acquire Swiss pesticide and seed maker Syngenta for US$43 billion. It was China’s largest foreign deal to date and would make the Chinese company the world’s biggest supplier of pesticides and agrochemicals. US regulators approved the deal in August.

Global banks continued to struggle. In February, Standard Chartered reported a loss for 2015 of US$2.36 billion. The Asia-focused bank was hit by its large exposure to emerging markets and too many bad loans.

Singapore’s Straits Times Index hit its lowest point of the year in February, dipping to 2,538. The year was not a great one for the market in Singapore which, as with other markets in the region, fluctuated but remained mostly flat before a late year dip put it in the red below the year’s start at 2,882.

Shanghai-listed Tianjin Tianhai Investment Co announced the acquisition of Ingram Micro, a California-based technology and supply chain company, for US$6.07 billion. Tianjin Tianhai is part of China’s aviation and shipping conglomerate HNA Group.

March

China’s Anbang Insurance Group announced plans to buy Strategic Hotels & Resorts for US$6.5 billion from Blackstone Group in one of the largest Chinese acquisitions of the year.

The deal was approved by September and involved 16 luxury properties. It was approved the same month that Marriott acquired competitor Starwood for US$13 billion to become the largest hotel chain in the world.

April

The International Monetary Fund (IMF) lowered its outlook for growth in the Asia-Pacific region to 5.3 per cent during 2016-17. “While Asia remains the engine of the global economy, the moderation in regional growth reflects the sluggish global recovery and slowing global trade,” the IMF said.

The Public Accounts Committee of Malaysia’s parliament identified US$4.2 billion in unauthorised or unverified transactions involving 1Malaysia Development Berhad, known as 1MDB, a government-owned development fund set up in 2009. The 1MDB scandal has been expanding since March 2015.

May

Controversial politician Rodrigo Duterte won the presidential election in the Philippines on May 9. He almost immediately started focusing his foreign trade and economic policy on China, announcing plans to turn his back on the US.

In October, Duterte visited China, his first official visit to a country outside Asean after taking office in June.

HNA Group continued expanding with its acquisition of US-based Carlson Hotels. HNA did not disclose how much it spent to acquire the 1,100 properties under the brands owned by Carlson, including Radisson and Park Plaza.

June

Surprising much of the world on June 16, the UK voted in a referendum to exit the EU. The results of the referendum are non-binding but the decision led to a change in government and left markets wondering how the split will affect the global economy.

China’s second-largest steelmaker Baosteel Group and Wuhan Iron & Steel Group, the country’s sixth-largest, stopped trading of their shares on June 27 as they announced plans to merge.

The move was part of China’s efforts to consolidate State-owned enterprises.

China’s outbound merger and acquisition deals hit a record high of US$134.3 billion for the first half of the year due to 493 outbound deals, up 178.5 per cent from the first half of 2015.

Among those deals was the acquisition by Chinese manufacturer Haier of General Electric’s appliance division for US$5.6 billion, which was announced in January and completed in June.

July

In one of its largest acquisitions ever, Japanese telecom giant SoftBank agreed to acquire British semiconductor maker ARM Holdings. It was the first large cross-border deal in Britain after the Brexit vote.

AMC Entertainment, controlled by the Dalian Wanda Group, upped a bid for US movie chain Carmike Cinemas. The announcement brought the total of founder Wang’s completed or announced deals in the year to the end of July to US$16 billion, with most in the entertainment space. The deal was finally approved in December, making AMC the largest film exhibition chain in the US.

August

The 2016 Olympic Games were held in Rio de Janeiro, Brazil. China came in second in the total medal count with 70. Japan received 41, Australia 29 and South Korea 21 to close out the top 10.

South Korean giant Hanjin Shipping filed for bankruptcy on August 31 after failing to raise extra cash or restructure a massive debt burden. The bankruptcy of the world’s seventh-largest deep-sea cargo transport company sent shockwaves through the industry globally.

In Singapore, technology startup nuTonomy rolled out limited tests on self-driving taxis. Claiming to be the first in the world, the autonomous cabs started picking up passengers within the city’s One North district.

Pokemon Go, the hit mobile game that introduced augmented reality to the public at large, launched in 15 countries in Asia and Oceania on August 6, roughly a month after its US release. The game launched by US-based Niantic proved to be a huge success.

September

The fortunes of South Korean electronics giant Samsung took a turn for the worse when it announced the first global recall of the Galaxy Note 7 smartphone after reports of batteries catching fire.

Over the next couple of months the recall expanded and by December the company began considering completely disabling the phone. The failure of the model was a huge blow for the company that was the largest smartphone maker in the world.

Parts of East Asia were hammered by super typhoon Meranti, the strongest storm of the year. Millions were affected, from the Philippines to China.

Hong Kong’s Hang Seng Index hit a year high, closing just shy of 24,100 on Sept 9. The index would drift down and end the year below the 21,914 mark it recorded on Dec 31, 2015.

China National Petroleum Corp (CNPC) announced plans to sell US$11 billion worth of assets to Jinan Diesel Engine, a listed arm of the group, in the year’s largest merger and acquisition deal in China.

CNPC also announced plans to sell US$3.8 billion worth of engineering assets to Xinjiang Dushanzi Tianli High & New Tech Co, a unit of the group listed on the Shanghai Stock Exchange.

October

The yuan became an official reserve currency when it joined the special drawing rights basket of the International Monetary Fund on October 1. The Chinese currency joined the dollar, euro, yen and pound as part of the very exclusive group of currencies.

The inclusion marked a “milestone in the internationalization of the renminbi, and is an affirmation of the success of China’s economic development and results of the reform and opening up of the financial sector”, said the People’s Bank of China. The inclusion of the yuan was the first addition to the basket since the euro in 1999.

Thailand’s King Bhumibol Adulyadej died on October 13 at the age of 88 and after seven decades on the throne. The funeral was held at Bangkok’s Grand Palace. Months of mourning impacted the country’s businesses and tourism, as many bars, restaurants and nightclubs closed. Even the fashion industry was affected, as people needed to wear black for the unprecedented national mourning. Crown Prince Maha Vajiralongkorn was later named as his father’s successor to take over the throne.

November

In a surprise victory, businessman Donald Trump won the presidential election in the US, possibly underscoring a significant change in policy direction. Markets reacted well in the US.

Alibaba’s Singles Day, the online shopping festival held annually on November 11, broke records. The company generated sales of US$17.8 billion, up 32 per cent from 2015.

In a move to curb corruption, India’s Prime Minister Narendra Modi announced a recall of the country’s largest-denomination banknotes, taking as much as 86 per cent of the country’s cash out of circulation. The government invalidated the 500- and 1,000-rupee notes, and announced plans to circulate new 500- and 2,000-rupee notes.

In its biggest ever overseas sale, the English Premier League sold the television rights to its soccer matches in China for US$700 million.

A year-end rally that began on November 9 would ultimately put Japanese stocks in the green for the year. The Nikkei 225 index started 2016 at 19,033 and spent most of the year in the red before crossing over the threshold in mid-December.

December

South Korea’s parliament voted on December 9 to impeach President Park Geun-hye over a corruption scandal. Park has been accused by prosecutors of helping a friend commit extortion. The scandal has triggered huge protests against the president across the country.

A decision by the US Federal Reserve to raise interest rates for the second time in a year and for only the third time since the 2008 global financial crisis exacerbated outflows of capital from Asian markets as investors poured money into US bonds.

South Korea’s antitrust regulator fined US telecommunications company Qualcomm US$865 million for violating competition laws. The December 28 fine was the largest the country’s antitrust regulator has ever issued.

Singapore and Malaysia agreed to a deal that would see the construction of the Kuala Lumpur-Singapore high-speed rail project by 2026. The historic project will cut travel time between the two cities to 90 minutes.

The yuan hit a low of 6.95 yuan to the US dollar on Dec 17 — the lowest it had been since June 2008.

The Great Wall, the first movie filmed entirely in China and intended as a global blockbuster, was released in China on Dec 16. Starring Matt Damon, the movie is due for release in North America in February. The film was produced by Dalian Wanda’s Legendary Entertainment and directed by Zhang Yimou.

Chinese companies invested US$51.09 billion in the US in 2016 through 65 deals, a 360 per cent surge from the previous year.

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