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Analysts at Nomura note that the net USD inflows have continued to moderate as Nomura’s six-month tracker of net pending cash flows is $11.8bn (from a peak of $86.4bn in April).

Key Quotes

“This downtrend has been fairly broad-based and not just isolated to single large transactions, with Europe being the main destination for US outflows. One possible explanation for the decline is increasing uncertainty around protectionist US trade policies.”

“Net M&A flows into the Eurozone have recovered, with net pending flows now in positive territory for the first time since November 2017.”

“The improvement picked up in our M&A tracking data also shows up in the official net FDI flows data, which turned positive in May. The recent uptick can be partially attributed to two EUR outflows totalling roughly $30bn removed from the 6m rolling window.”

“JPY net pending outflows remain at record highs, with a $53bn pending outflow reported in September. The trend continued to hold after the announcement of the Takeda/Shire megadeal in April ($29.2bn cash value, $81.5bn total transaction value).”

“UK M&A pipeline has continued to improve over the last few months. Net pending inflows recorded in September totalled $40.7bn, the highest number since 2016.”

“In summary, GBP currently has the largest pending inflows expected from M&A activity, followed by AUD, USD and CHF. JPY has the largest net outflows, followed by CNY and CAD.”