Title: In the first quarter, the transaction volume of Hong Kong-listed companies increased by 10%, AI investment boosting the wave of mergers and acquisitions in the technology industry.

According to the latest research report on M&A agreements in 2026 published by Decheng (Hong Kong) Certified Public Accountants, following a brief rebound the previous year, the number of M&A agreements among Hong Kong listed companies decreased by 11% to 222 in 2025. However, there are preliminary signs of a recovery in M&A activity in Hong Kong in 2026, with a year-on-year increase of about 10% to 56 transactions in the first quarter of 2026. It is expected that the overall M&A activity for the rest of 2026 will show moderate growth, reflecting an improved market sentiment but still cautious. AI investment drives the surge in technology industry acquisitions Benefiting from increased investment in scalable AI business models in the market, M&A activity in the information technology industry has significantly increased, accounting for 14% of total transactions compared to 6% in the previous year. In 2025, the real estate and construction industry and the IT industry became the two hottest acquisition targets, accounting for 35% of the total business acquisitions, down from 44% in 2024. Although the real estate and construction industry remains the primary acquisition target, the number of transactions slowed down to 13 acquisition agreements. This slowing trend reflects a shift towards more cautious transaction pace in the market after several waves of intense corporate restructuring, while the market also faces increasingly challenging conditions in executing acquisitions. Boosted by cross-border capital flows, transaction activity regains momentum Billy Tang, Managing Partner of Decheng Hong Kong Consulting, stated that the increase in transaction volume in the first quarter of 2026 reflects the gradual stabilization of market activity after a sluggish 2025. As we enter 2026, with more balanced cross-border capital flows and continued support from a pipeline of transaction projects, transaction activity has regained momentum, especially in the Asia-Pacific region. Despite ongoing macro risks such as geopolitical tensions and trade uncertainties causing market volatility, stability in credit markets and gradually easing monetary policies are helping to revitalize long-term confidence among market participants. AI-driven investments continue to be a key engine for corporate M&A transactions Tang added that looking ahead, AI-driven investments will continue to be a key engine for corporate M&A transactions. Investors are increasingly focusing on technology-related sectors, prioritizing companies with strong AI capabilities and scalable business models. While financing costs are expected to remain above pre-2020 levels structurally, improved liquidity is providing a solid foundation for strategic and larger-scale transactions.