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UNCTAD released a report titled Global Investment Trends Monitor

May 19, 2015 17:50 IST

United Nations Conference on Trade and Development (UNCTAD) on 18 May 2015 released a report titled Global Investment Trends Monitor.

The report highlighted that developing Asia now invests more abroad than any other region. This UNCTAD trends monitor analyses the most recent trends in global outward investment and assesses its prospects for 2015. It covers outward FDI trends in developed, developing and transition economies.

Main highlights of the report

•    Hong Kong (China) and China were the second and the third largest investors in the world, after the United States which remains the largest single source of outward foreign direct investment (FDI).

•    Among the 20 largest investors, nine were either from developing or transition economies.

•    In 2014, transnational corporations (TNCs) from developing economies alone invested almost half a trillion US dollar abroad − a 30% increase from the previous year.

•    TNCs share in global foreign direct investment (FDI) reached a record of 36%, up from 12% in 2007, the year prior to the financial crisis.

•    Developing Asia has become, for the first time, the world's largest investor region with 440 billion US dollar invested, followed by North America and Europe.

•    Investments by developed country TNCs were largely flat at 792 billion US dollar, with the modest rise in flows from North America and Europe more than offset by a 16% decline in Japanese investment abroad.

•    More than half of investments from TNCs based in developing economies were in equity, while as much as four-fifths of FDI outflows from developed country TNCs were in the form of reinvested earnings − the result of record amounts of cash reserves in their foreign affiliates.

•    The value of cross-border merger and acquisitions surged to 399 billion in 2014 − 28% above 2013 levels. Megadeals dominated the scene in 2014. TNCs from the South continued to acquire developed country foreign affiliates in developing world.

•    Announced greenfield investment projects rose by only 7% reaching 744 billion US dollar. The increase was driven mainly by investments from TNCs of the South. Greenfield investors from developed countries, however, account for a larger share (66%).

UNCTAD estimates that TNC investment appetite will improve, encouraged by better economic prospects, especially in the United States, proactive monetary policy in the Eurozone and the large cash holdings of companies. However, TNCs remain guarded due to the fragility in some emerging markets, exchange rate volatility and increased geopolitical tensions.

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