(Yicai Global) April 27 -- Investment and trading activity in China are expected to slow this year, Bain & Company said in a report yesterday.

The international consultancy cited stronger wait-and-see sentiment among investors and the widening valuation gap between buyer and seller expectations caused by the stock market correction.

China’s private equity market will face many challenges amid geopolitical uncertainties and the pressures of a weak economy, Kelly Pu, Bain global partner and co-author of the report, told Yicai Global. But that will also create new buying opportunities for investors, she added.

The annual investment transaction volume of the Chinese PE market hit a 10-year high of USD128 billion last year. However, the scale of fundraising and exits fell sharply in the second half of 2021, setting a new five-year low, the report showed.

Tech sectors such as semiconductors, electric vehicles and renewable energy are expected to remain hot with PE investors. Software, software as a service, artificial intelligence, medicine, and biotechnology are also the most active areas for investment, it suggested.

PE investments are expanding to upstream areas of the new energy vehicle sector such as auto parts, lithium-ion batteries, AI chips and automotive software, Zhou Hao, Bain global partner, told Yicai Global, noting that these areas are still popular investment outlets.

Editors: Xu Wei, Peter Thomas