Key Findings
- Geopolitical competition is reshaping the global landscape for cross‑border investment and mergers and acquisitions (M&A), influencing how capital is deployed along key regional corridors.
2. U.S. and European investment in China has undergone the most pronounced retrenchment, driven by heightened strategic friction, expanded export controls, and more assertive investment screening regimes in the United States and Europe. However, sectoral exceptions persist; transactions where the US is acquiring Chinese healthcare and biotech assets have accelerated since 2020, driven largely by licensing agreements that allow US firms to access Chinese innovation without full ownership exposure.
3. American and European capital is being reallocated from China toward emerging “de risking hubs” like Southeast Asia, India, and Mexico, where greenfield foreign direct investment (FDI) has risen in technology‑intensive sectors, particularly in computers and electronics.
4. Nearly half of U.S. and European cross-border M&A occurs between the two markets, anchored by deep institutional alignment and integration in sectors such as healthcare and electronics.
5. U.S.–Gulf Cooperation Council (GCC) capital flows remain episodic on the M&A side, dominated by high-profile megadeals in AI, digital infrastructure, and entertainment, but are gradually deepening through two-way FDI in strategic sectors.
6. Taken together, these patterns point to a global investment system increasingly influenced by geopolitical alignment, industrial policy, and supply chain resilience, requiring corporates to factor geopolitical considerations into investment decisions and dealmaking strategy.
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