That has created opportunities for consolidation as bigger, better-positioned companies seek to acquire smaller or distressed peers at bargain prices, bankers said.
"We are just starting to see the emergence of what a potential post-COVID situation will look like," said Greg Peirce, co-head of global M&A at UBS. "Larger corporations with stronger capital structures and good access to debt markets are well placed to look for opportunities."
Ongoing examples include Singapore state investor Temasek Holdings supporting a $1.5 billion rights issue by money-losing rig builder Sembcorp Marine Ltd.
Parent Sembcorp Industries Ltd plans to reduce its 61% stake after the deal, meaning Temasek - which is also trying to buy control of the parent of another rig builder - could become the largest shareholder.
"There are domestic consolidation discussions underway in almost every market," said Rohit Chatterji, co-head of Asia-Pacific M&A at JPMorgan.
China's Zhejiang Geely Holding Group Co Ltd - Daimler AG's largest stakeholder and owner of Volvo Cars - is set to take over automaker Chongqing Lifan Holdings Ltd CQLIF.UL , whose prolonged sales fall has been exacerbated by the impact of the virus, Reuters reported this month.
"We are seeing less appetite for venturing into new markets with risky new bets and more desire to get an asset down the street that you know you can run well, and where you can take lots of costs out," said Chatterji. "That then makes the shareholders happy and it makes it easier to get financing to back the trade."
PRIVATE EQUITY AT PLAY
Private equity firms have stayed busy, with 912 deals being the record number for a six-month period. By value, deals rose 4.2% to $41.9 billion.
The industry holds a record $382.1 billion in investable funds for the region, data from Preqin showed.
This month, a consortium led by KKR & Co Inc invested $650 million in Vietnamese property firm Vinhomes JSC as parent Vingroup JSC revamps businesses.
Buyout firms are also considering the potential to take listed companies private, betting valuations that dropped during the pandemic could eventually yield profitable re-listing or sale opportunities.
A consortium involving General Atlantic and Warburg Pincus LLC is set to take Chinese online classified advert firm 58.com Inc private in a deal valuing it at about $8.7 billion - the region's largest private equity take-private deal so far this year.
To be sure, there is increased uncertainty for deals to close, bankers said, as buyers may seek bigger discounts to compensate for an economic outlook made less predictable by the virus.
"If there is a long wait before a widely available and effective vaccine for COVID-19 is found, then we will have to ask difficult questions about the prospects of sectors such as tourism, conferences & conventions, cruises, gaming, hospitality, aviation, and certain categories of leisure services," said Choe Tse Wei, head of strategic advisory at DBS Bank.
(Reporting by Kane Wu in Hong Kong and Anshuman Daga in Singapore; Editing by Jennifer Hughes and Christopher Cushing) ((firstname.lastname@example.org; +85228436590; Reuters Messaging: email@example.com))