Taiwanese and Chinese companies are the most likely to undertake merger and acquisition activity in the next 12 months, and Indonesia and Vietnam overtake China and India as the most popular places to do deals.

Although having relatively strong balance sheets, many Asian financial institutions remain reluctant to buy because of market uncertainty.

Of the 215 Asian financial institutions polled, 42 per cent forecast that they will do a deal this year, up from 38 per cent in last year’s survey, held in the beginning of 2008 before the region experienced the full force of the financial crisis.

Matthew Philips, PwC China partner based in Shanghai, is reported as saying the value of transactions for this year was set to fall to the level of 2005 and 2006, which reported $38.7 billion and $64.5 billion worth of deals respectively, as companies are more likely to do smaller transactions.