Sharp fall in first quarter of 2008 - The number of mergers and acquisition in the world during the first quarter of the year fell by 22%, according to data provided by Dealogic and published in the French daily, Les Echos. The market is also feeling the impact from sovereign wealth funds. According to figures published by the research company, the volume of operation implanted in emerging countries and aiming at western targets almost doubled in the first three months of the year. They reached a figure of almost $200bn, a quarter of the world's merges and acquisitions, bolstered by the raid of the Chinese company Chinalco, in alliance with Alcoa, of the stock of Rio Tinto in February to the tune of $14bn. This means that China has become the most active country in the category of emerging countries with a 41% rise in volumes that are worth $35.4bn. The other major operation in the emerging markets is the merger of the São Paulo stock exchange and the medium term stock exchange, the Bolas de Merdadorias & Futoros for $9bn. Suddenly, the average size of deals has risen in a year, a sign of the increasing power of companies implanted in high growth areas or affected by the financial crisis. There is a structural factor in the trend and investments are being led by the sovereign wealth funds accounting for a significant part of the market. According to Dealogic, sovereign wealth funds have invested at least $25bn since the beginning of the year as opposed to 4bn the previous year. Coming to the rescues of the major banks that had been weakened by the crisis, they carried out 18 investment operations in the first quarter, mainly in the finance sector, with purchases in Citi, Merril Lynch and UBS. Given that other markets were much more affected by the crisis, they have suffered much more painful falls in business activity. Short on funding, operations by venture capital companies experienced a violent drop of 65% to $63bn and they only managed to increase business activity in the Asian market. The biggest operation announced by a venture capital group was the proposed buyout by JC Flowers for Friends Provident of $6.8 million. The offer was rejected. No deals worth more than $10bn have been achieved by a venture capital group since the beginning of the year. Business has clearly faltered in Europe, despite a strong impetus on East European markets displaying growth rates in double figures. Business volume stood at $328bn, a fall of 23%. The same trend was displayed on the US market, with a fall of 28% to $318, a third of which resulted from the unlocking of Altria and the Philippe Morris spinoff. On the other hand, the “mid market”, which includes transaction involving $100-$1bn is flourishing on the two continents. Benefiting from easting banking credit, the mid market has grown by 4% in Europe and by 19% in the US.