By Denny Thomas

HONG KONG (Reuters) – In less than six months of 2016, China’s appetite for overseas acquisitions has already outgrown last year’s record, as deal-hungry mainland buyers chase global assets such as real estate, chemicals and high-end technology.

China National Chemical Corp’s $43 billion bid for Swiss agrichemicals maker Syngenta makes up almost 40 percent of this year’s $111.6 billion total, but even without that deal the pace has quickened.

Bankers and lawyers say there could, however, be some slowdown in the second half, as mainland buyers face heightened scrutiny at home and abroad.

China International Capital Corp, the country’s biggest investment bank, expects outbound deals to hit $150 billion this year.

Chinese acquirers announced $111.5 billion worth of deals in 2015 from 632 transactions, according to Thomson Reuters data. Completed deals, on which banks are paid fees, last year stood at $73 billion, compared with $45.6 billion so far this year.

Some recent Chinese technology deals have met with opposition, however, which could turn some buyers cautious. Midea Group Co’s efforts to buy out German industrial robot maker Kuka, for example, provoked a political furore in Germany, and the company has had to offer numerous guarantees on preserving local sites and jobs.

“We expect outbound M&A activities will continue to rise, but not at the nose-bleeding rate of the first quarter of 2016,” said David Wu, head of corporate finance, China, for ING Bank.

China’s desire to temper the outflow of its foreign reserves, which dropped more than half a trillion dollars last year, could also curb deals.

Lawyers say the State Administration of Foreign Exchange (SAFE), the custodian of the country’s $3.19 trillion reserves, is anxious that the deal outflows could weigh on the yuan currency.

“SAFE cancelled the formal approval process for outbound transactions some time ago, but they are monitoring flows going out quite carefully, given the recent surge in money leaving the country,” said Andrew McGinty, a partner at Shanghai-based partner at law firm Hogan Lovells International.

Uncertainty surrounding the outcome of this week’s referendum in Britain over its membership of the European Union and the upcoming U.S. presidential elections in November are also factors likely to slow Chinese overseas purchases, bankers say.

After many years of focusing on the booming domestic economy, Chinese companies are increasingly looking to diversify their revenues as growth at home slipped to a 25-year low.

Chinese state-owned and private companies are also looking to upgrade their manufacturing prowess with overseas technology.

Other big purchases announced by China Inc this year include HNA Group’s $6.3 billion acquisition of Ingram Micro Inc and Haier Group’s $5.4 billion bid for General Electric Co’s appliances unit.

“Whether it be from the private sector, government or even middle market firms, this expansion is strategic and long-term focused,” said John Kim, head of M&A, Asia ex-Japan at Goldman Sachs.

“The appetite is particularly voracious for technology, media, healthcare and financial services, and for the foreseeable future it won’t be going away,” he added.

(Reporting by Denny Thomas; Editing by Will Waterman)

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