ISLAMABAD: Countries in developing Asia have, for the first time, collectively invested more money abroad than North American and European countries, the UNCTAD ‘Global Investment Trends Monitor’ said on Monday.

The report revealed that Foreign Direct Investment (FDI) outflows from developing Asia increased by a third to $440 billion in 2014, followed by North America ($390bn) and Europe ($286bn). The growth was widespread across all the major Asian economies and sub-regions.

The UNCTAD report said that Hong Kong and China were the second and the third largest investors in the world, after the United States which remained the largest single source of outward FDI. Among the 20 largest investors, nine were either from developing or transition economies.

Moreover, transnational corporations (TNCs) from developing economies invested almost half a trillion US dollars abroad in 2014 — a 30 per cent increase from the previous year. Developing Asia’s TNCs for the first time became the world’s largest investors, accounting for almost one-third of the total.

Investments by TNCs of developed economies were largely flat at $792bn, with the modest rise in flows from North America and Europe mainly offset by a 16pc 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 countries 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 $399bn in 2014 — 28pc above 2013 levels. Mega-deals dominated the scene in 2014.

Announced Greenfield investment projects rose by only 7pc reaching $744bn. The increase was driven mainly by investments from TNCs of the South. Greenfield investors from developed countries, however, account for a larger share.

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 holding companies.

Published in Dawn, May 19th, 2015

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