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Emerging markets challenge west in global investment surge: UNCTAD
2006-10-16
Global foreign direct investment rose by 29 percent in 2005 to 916 billion dollars as investors from emerging markets burst onto the scene as rivals for western multinationals, the UN trade and development agency said in a report. "The emergence of these multinationals from the South marks a deep shift in the world economy," said Anne Miroux, one of the authors of the "World Investment Report 2006". "It's an additional sign of a transfer of economic power to developing regions, especially Asia," she told journalists. It was the second consecutive year of net growth in FDI worldwide. Overall cross-border mergers and acquisitions reached close to their 1999 boom levels, growing by 88 percent last year to 716 billion dollars as recovering stock prices encouraged big companies to undertake "mega-deals" worth more than 1.0 billion dollars, the report said. There were 141 such deals in 2005, more than twice as many as a year earlier, the UN Conference on Trade and Development (UNCTAD) added. They were worth nearly half (454 billion dollars) of the global total of FDI inflows. "The trend is for growth and the estimates for 2006 confirm this growth," said Miroux. The investment patterns were marked by the emergence of companies based in Hong Kong, Russia, Singapore, Taiwan, Brazil and China as major sources of investment abroad, the report said. Hong Kong appeared in the top ten of the table of leading national sources of FDI, while mainland China was a "remarkable" 17th place in 2005, Miroux said. Developing nations invested 117 billion dollars abroad, mainly within their regions. The developing nations' overall share of cross-border mergers has increased from four percent in 1987 to 13 percent in 2005, according to UNCTAD. Miroux highlighted recent big individual corporate bids, such as Indian group Mittal Steel's takeover of European giant Arcelor for 25 billion euros (31 billion dollars), Dubai Port World's 6.9-billion-dollar takeover of British group P and O, or state-owned Chinese oil group CNOOC unsucessful bid for US oil firm UNOCAL. "We were not used to seeing big companies from the South buying some of the industrialized economies' flagships," she explained. "One of the messages of this report is that multinationals from the South are here to stay, it's a lasting reality that both companies in the North and political leaders need to take into account," Miroux added. Although industrialized economies are still predominant as sources and destinations for investment, developing countries showed high FDI growth rates. West Asia and Africa recorded "unprecedented" investment inflows to record levels of 34 billion dollars and 31 billion dollars, the report said. Flows into South and East Asia also achieved a new high of 164 billion dollars in 2005, an annual increase of 19 percent. Investment flows into industrialized nations, which attract 59 percent of FDI, rose by 37 percent over 2004 to 542 billion dollars, the report found. Britain, the United States and China (72 billion dollars) were the largest recipients, according to UNCTAD. FDI into Britain tripled to 165 billion dollars, largely due to the 74 billion dollar technical merger of the Dutch and British parts of the oil giant Shell. FDI flows into the United States -- where British companies remain the largest investors -- fell by 19 percent to 99 billion dollars. Inflows into the European Union nearly doubled to 422 billion dollars, most of it due to rising cross-border investment within the 25-nation bloc. The EU's 15 "old" members accounted for 388 billion of that amount, partly due to the British surge. The ten new members attracted 19 percent more FDI, reaching a record 34 billion dollars.
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