Tightening cross-border investment rules may cause a pinch

Cross-border investment may see stresses and strains this year with some major economies tightening their rules regarding foreign investment, according to a report by law firm Freshfields Bruckhaus Deringer.

Five of the G7 countries have strengthened their foreign investment regimes since 2014, and further changes to foreign investment frameworks are expected both within and outside the G7, the law firm said in a research note.

It also said the United States, the United Kingdom and the European Union are currently reviewing their foreign investment rules.

But under such a harsh business environment, the global transaction of mergers and acquisitions still topped US$1 trillion in the first quarter of this year. Alan Wang, corporate partner at Freshfields Bruckhaus Deringer, said “it is fair to say that the year of 2018 has started with a bang.”

Wang said that Chinese investors, who have spent much less abroad after the 2016 spree due to tightened rules both at home and abroad, may face stricter scrutiny, but that quality acquirers still have the chance to get good deals if they can present themselves well.