Asia-Pacific M&A volumes slowed during the first nine months of 2026 compared with the prior year period partly due to disruption from the conflict in the Middle East, said bankers. But the region is generating more billion-dollar deals than a year ago.

APAC M&A totaled USD 825bn in 9M26, down 5% year-on-year, while deal count fell to about 8,307 transactions, the weakest nine-month tally since 9M24. Despite the slowdown, large-cap activity strengthened across multiple markets, with 152 deals worth more than USD 1bn announced in 9M26, up from 133 a year earlier, although deal volume declined to USD 438.1bn from USD 511.8bn

“Deal numbers remain robust, although average deal size has moderated,” said Tom Barsha, co-head of Asia Pacific Investment Banking Coverage and head of Asia Pacific M&A, BofA Securities. “We are seeing increasing divergence across the region, with Japan and China seeing a more cautious environment while Australia, Southeast Asia and Korea continue to see strong activity.”

Regional rotation

China remains APAC’s largest M&A market, but volume fell 24% year-on-year to USD 296.1bn largely due to the drop-off in mega cap state-driven merger activity. “The country’s Ministry of Finance has still carried out large scale capital injections into financial institutions in China such as ICBC and People’s Insurance Company of China, said Samson Lo, co-head of APAC M&A, UBS. “And there have been some domestic mergers in government supported sectors such the tie-up between brokers Orient Securities and Shanghai Securities.” Chinese private equity funds have also been involved in high profile acquisitions of European brands such as CPE’s acquisition Swiss outdoor brand Mammut Sports Group, he noted.

Japan recorded an even steeper 38% decline, with volume falling to USD 111.9bn. However, Japan’s headline decline should also be viewed in context. The country is the seventh-most-active market globally for announced M&A and the third-most-active for public M&A in 9M26. “Corporate governance reforms, a weak yen and an increase in private equity activity continue to underpin Japan’s robust deal environment,” said Barsha.

Almost 70% of the USD 161.8bn decline in activity from Japan and China has been offset by a meaningful surge elsewhere in line with M&A mega themes in AI, energy security and transition.

Southeast Asia delivered the strongest growth, with M&A volume surging 113% to USD 95.4bn driven by several large cap deals in the data centre and renewables space. Australia, which Barsha described as a bright spot, rose 104% to USD 124.2bn on the back of activity in mining and critical minerals, TMT and private equity.

Semiconductor-related deals saw South Korea and Taiwan jump 15% to USD 58.3bn and 126% to USD 12.2bn, respectively. And India, which Lo said was one of several APAC countries exposed politically and economically by the conflict in Middle East, remained broadly flat at USD 107.1bn.

“While international investment in China transactions remains suppressed, robust activity across the region in data centres, digital infrastructure and other high conviction sectors are driving a busy year with a number of large value transactions,” said Tyler Cohen, partner of Gibson, Dunn & Crutcher.

Crossborder deal data suggests both global and regional-based investors are finding attractive opportunities in APAC amid a volatile global geopolitical environment. APAC inbound M&A, driven by the United States, South Africa and the United Kingdom, reached USD 132.8bn in 9M26, up 59% from a year earlier and the strongest nine-month performance on record. Prominent announcements include South Africa’s Gold Fields’ recent unsolicited USD 25.8bn non-binding bid for ASX-listed gold miner Northern Star, which has so far been rejected.

This contrasts with APAC outbound deals where volume fell to USD 29.7bn in 3Q26 marking the fourth consecutive quarterly decline since peaking at USD 73bn in 3Q25. Japan continues to lead in APAC outbound acquisitions with deals such as Kirin’s USD 1.8bn acquisition of Jamieson Wellness, the Canadian natural health products business, noted Lo.

The overall drop in APAC outbound M&A comes amid heightened foreign investment scrutiny, particularly for Chinese acquirors. JD.com’s USD 4.7bn acquisition of German consumer electronics retailer Ceconomy and MMG’s USD 500m acquisition of Anglo American’s Brazilian nickel assets continue to face in-depth probes from the European Commission despite both being announced more than a year ago.

Technology and data centres power growth

Sector trends reflected continued demand for AI infrastructure, cloud computing capacity and digital connectivity assets.

Technology-related M&A remained the region’s largest sector rising 33% year-on-year to USD 180.5bn across 2,297 deals followed by healthcare, which increased 57% to USD 71.5bn, and mining up 252% to USD 67.8bn.

“Data centres remain a focal point of the region’s largest transactions and we expect to continue seeing high levels of activity in the space moving forward,” added Cohen, who co-led his firm’s involvement in the USD 9bn acquisition of Singapore-based ST Telemedia Global Data Centres by a consortium headed by KKR.

APAC has been the world’s most active region for data centre dealmaking this year, with a record USD 20.3bn of M&A across 33 deals. The data supports the widely held view that these investments are creating secondary M&A opportunities across power generation, utilities, construction and critical infrastructure.

Public targets attract private capital

While sponsor-led M&A volume has edged higher – USD 174.2bn in 9M26, up from USD 150bn a year earlier – and deal count is more or less flat around the 839 mark, take-privates have reemerged as a stand-out trend. Listed targets account for more than half of the 25 large-cap private equity buyouts announced in APAC year-to-date, up from fewer than one-third of the 19 comparable transactions in 9M25. In terms of geographies, Japan and Australia are to the fore.

Private equity exit activity also improved modestly, with deal value rising to USD 49.6bn across 204 deals in 9M26 from USD 46.9bn across 179 deals in 9M25. Stronger equity capital markets have proved helpful, but a handful of block trades and sell-downs have moved the needle, led by Bain Capital’s staged exit from Kioxia early in the year. This is one of the largest private equity monetizations ever seen in Asia.

Portfolio reshaping fuels auctions

Among APAC auctions, consumer & retail was a standout sector in 3Q26, accounting for 21% of active sale processes, up from around 16% over the previous three quarters. Carve-outs, especially in Japan and China, remain defining theme of APAC auction activity. Carve outs represent 23% of all active sale processes in APAC, this is comfortably above levels seen in the Americas and EMEA, as corporates continue to reshape portfolios and drive strategic divestments.

• Hong Kong’s CK Infrastructure has launched a sale of Australia’s EDL Energy targeting an AUD 2bn-plus valuation.
• French auto supplier Forvia is exploring a sale of its Japanese unit Clarion Electronics.
• Emerging-markets investor Actis has drawn non-binding bids in the INR 220bn (USD 2.32bn) enterprise-value range for Indian renewables platform BluPine.
• The sale of South Korea’s Lotte Card by MBK Partners and Woori Financial, which was abandoned last year, is resuming with teaser distribution.
• Shell is exploring a sale of a majority stake in Shell MDS (Malaysia), its Bintulu-based gas-to-liquids plant at a potential USD 1bn valuation.

For the full global M&A highlights, refer to our global issue here.