The record level of private capital fundraising and investment in emerging markets in 2018 is so far not repeating itself in 2019, according to EMPEA's midyear industry statistics report released Tuesday.
That was partly to be expected after 2018, EMPEA officials noted, but also due to investment slowdown in China and rising trade tensions between major economies, among other factors.
In the first half of 2019, emerging market alternative investment funds raised 10% less, $31.9 billion, and invested 32% less, $26.3 billion, across all emerging markets and asset classes, including private equity, venture capital, private credit, private infrastructure and real estate.
Some sectors remained resilient in 2019, including energy, financial technology and health care. Geographically, bright spots included Africa, Brazil and India. Capital invested in India, the Middle East and Latin America increased over the 2018 period.
Still, this year is on track to record the third highest total since EMPEA began tracking investment in 2008, based on the $26.3 billion deployed in the first half of 2019.
China usually accounts for a large part of emerging market capital invested, but the first half of 2019 saw a drop to $9.8 billion from $15.1 billion a year earlier, while the number of deals fell to 322 from 582.
The China correction might have been inevitable after setting records in 2018, said Jeff Schlapinski, EMPEA senior director of research. While problems like trade tensions and financial system debt might give investors pause, "they can adjust to the new conditions from a position of relative strength," Mr. Schlapinski said in the report.
Fundraising in Southeast Asia rose to $1.4 billion by midyear 2019 from a low point in 2016 and might prove more attractive as fewer private equity partners pursue buyouts. After a two-year spike, India-focused fundraising dipped to $2.1 billion in the first half of the year, but at $6.5 billion in disclosed investments the country is still on track to set a new record, driven by large infrastructure deals.