"China and India still remain the top two targets for M&A in the region... and interest in India has increased to 39 per cent to 36 per cent," financial advisory firm PricewaterhouseCoopers said in an annual survey conducted with the Economist Intelligence Unit.

The survey of 230 executives in Asia revealed that the financial services sector is expected to continue witnessing M&A deals in the next five years which are now expanding into other related sectors.

"M&A activity is now broadening as sectors, such as insurance and trusts have also begun to open up," it said. Meanwhile, in China interest in M&A activity slightly declined to 47.3 per cent from 52 per cent last year.

Taiwan, Pakistan and Vietnam are also fast emerging as growing markets of M&A activity after opening up of both regulatory and vendor perspective.

According to the findings of 'Financial Services M&A: Going for growth in Asia', the financial services sector is expected to continue to undergo significant M&A activity over the next five years buoyed by high levels of confidence and optimism in the economy.

Expectations are slightly up on the previous year with 74 per cent of survey respondents predicting significant M&A activity in the coming five years compared to just over 68 per cent in 2006.