Global corporate deals kicked off 2017 with their best January since 2000, but international acquisitions of U.S. firms are lagging in the face of political uncertainty.
"The primary trading M&A partner with the U.S. is Europe. With the uncertainty surrounding Brexit and the regulatory and particularly the changes in tax, it's led to companies shying away until they have more clarity," Jim Osman, head of spinoff research firm The Edge Consulting Group, said in an email.
More than $270 billion in worldwide mergers and acquisitions was announced last month, topping the $207.1 billion in announced deals in January 2016, according to S&P Global Market Intelligence.
In contrast, foreign acquisitions of U.S. firms last month totaled only about $13.2 billion, down from $48 billion in January of last year. It's the slowest start to a year since 2009, the data showed.
The drop comes despite China's Ant Financial announced a deal to buy Dallas-based MoneyGram for $1.6 billion, including debt, and the purchase by Canada's AltaGas of WGL Holdings for more than $6 billion, said Richard Peterson, senior director at S&P Global Market Intelligence.
"In terms of foreign buying in the U.S., it's going to be a cautionary outlook, because there's uncertainty about what the Trump administration will be, because of their 'America First' outlook," he said.
Johnson & Johnson's roughly $30 billion deal to buy Swiss biotech firm Actelion last week accounted for the bulk of U.S. acquisitions of foreign targets in January, S&P said.
Peterson said corporations were waiting to see what changes are made to tax repatriation policy and what the Treasury Department's stance on antitrust regulation will be.
Democrats have boycotted Steven Mnuchin's confirmation for Treasury secretary. The Obama administration took a stance against several large tie-ups, working against consolidation in industries and preventing cross-border deals as U.S. companies attempted to cut their U.S. taxes by combining with overseas firms.
So far this year, the bulk of announced corporate deals in the U.S. have been in energy and health care, Peterson said.
He attributed the pickup in corporate deal-making around the world to positive sentiment, credit availability and gains in share price that give companies more buying power. There's "a lot in the pipeline," he said. It "could well be a record year."
Corporate bond issuance hit $174.03 billion in January, the second biggest on record since May 2016 and the busiest January ever, according to Informa Global Markets. The rush to issue bonds comes ahead of potential changes in tax policy and additional interest rate hikes by the Federal Reserve.