Chinese outbound investments are expected to continue rising with the yuan's depreciation and three upcoming rate hikes by the US Fed next year.

That's according to experts attending a forum held by China's M&A alliance. Laura Luo looks at the impact of the policies on China's outbound mergers and acquisition deals.

As the US speeds up its interest rate rises, and the yuan keeps travelling south, overseas investment will inevitably become more expensive for Chinese players.

Experts say Chinese companies' appetite for cross-border merger and acquisition deals will soften.
 
“Short term uncertainties including exchange rate, protectionism, newly imposed domestic regulations that govern the capital outflow, all these will weigh down the sentiment of overseas purchases."said Fred Zuliu Hu,chairman of Primavera Captial Grop.

Data from Dealogic shows that China surpassed the US as the largest cross-border M&A deal maker in the first three quarters this year.

M&A value totalled 174 billion dollars, up nearly 70% from last year. Drummed up expectations ahead of the US rate hikes have played a big role in driving China's outbound M&A to record highs.

"So will the pace of Chinese companies overseas purchase slow down? Experts say not necessarily. Because as China improves its economic structure, companies' M&A targets will be shifting from buying resources, to technologies. "

Yang Yu is the head of the investment banking division of China Minsheng Bank.

“Chinese companies have seen very fast M&A pace in the global market. But the pace could be temporarily impacted from the supply of foreign exchange, foreign governments' restriction on investments due to securities reasons. However with the inevitable trend of globalisation, we will overcome these obstacles. ”said Yang Yu.

In fact, the accumulated amount of China's outbound investment is not that big compared with developed countries.

"In the long run China's current account surplus will lead to more overseas investments....” said Fred Zuliu Hu.

A survey by China Mergers & Acquisitions Alliance shows that 86% of Chinese companies expressed interest in overseas M&As in the next two years.

The alliance says it's simply time for Chinese companies to become more integrated with the global market no matter the exchange rate of the yuan.