China's outbound investment could be affected by the outbreak of novel coronavirus pneumonia this year, and experts suggested companies prepare to hedge possible risks in advance, according to newly released research from Ernst & Young (EY), a global professional service group.

The research, named Overview of 2019 China Outbound Investment, indicated that the country's outbound investment last year declined moderately, with the overall overseas direct investment falling by 9.8 percent year-on-year and the overseas mergers and acquisitions declining by 31 percent.

"Affected by the novel coronavirus, China's outbound investment should be further observed in line with the epidemic control progress later this year," said Loletta Chow, Global Leader of EY China Overseas Investment Network.

Chinese investors should be fully prepared, paying close attention to sectors that support structural adjustment, transformation and upgrading, such as telecommunications, media and technology (TMT), health and life sciences and advanced manufacturing sectors, said Chow.

Driven by the Belt and Road Initiative, Asia became the most popular overseas M&A destination for Chinese enterprises, recording growth despite the overall downward trend, the EY report said.

Overseas TMT, consumer products and power and utilities sectors continued to be favored by Chinese enterprises. China overseas engineering, procurement and construction contracts continued to develop steadily, with a year-on-year increase of 7.6 percent in 2019, it said.

The total value of China's newly signed overseas engineering, procurement and construction contracts increased by 7.6 percent year-on-year to $260.3 billion.

"The increase in trade barriers and geopolitical uncertainty in 2019 affect global business confidence and economic activities. In early 2020, overseas uncertainties were reduced with the signing of the phase-one trade deal between the US and China as well as the success of Brexit," said the EY leader.