FDI set to rise by 20pc for wealthiest nations
Saturday, 23 June 2007
Scheherazade Daneshkhu
LONDON: Foreign direct investment into the world's 30 wealthiest nations is set to rise by 20 per cent this year, thanks to high corporate profits, low interest rates and solid economic growth, the Organisation for Economic Co-Operation and Development said on Thursday.
The increase would come on top of the 22 per cent increase in FDI in 2006 to $910bn. This was the third consecutive annual rise and the highest figure since 2000, the Paris-based body said in a report published on Thursday.
The report noted that the average value of M&A deals in the first five months of the year was the highest on record for inward and outward transactions: "If the months January through May are indicative of the year 2007 as a whole, then the total value of cross-border M&As in OECD countries will exceed $1 trillion [$1,000bn] for only the second time in history."
The OECD said FDI last year had been underpinned by a small number of very large cross-border merger & acquisition deals. The top five deals totalled $120bn and included the $32bn takeover of Arcelor, the Luxembourg-based steel maker by Mittal Steel of the Netherlands and the $31bn acquisition of 02, the UK telecommunications company by Spain's Telefonica.
Another interesting trend was the emergence of large investors from emerging economies. It cited India's Tata Steel, which took over the Anglo-Dutch Corus group to form the world's fifth biggest steel firm and Brazil's CVRD, which became the world's second-largest min ing company, thanks to its acquisition of Canada's Inco.
Such acquisitions has led to a rise in hostile attitudes in the host country, noted the OECD. "The takeover of prized national enterprises is controversial in most countries," it said. Although some countries had tightened their practices toward inward FDI on grounds of national security: "On balance, however, the negative political undercurrents have not yet translated into a slowdown of direct investment flows. On the contrary, FDI is booming."
The US reclaimed its position as the world's largest recipient of foreign direct investment in 2006, partly as a result of a weaker dollar, after being knocked off its customary perch by the UK in 2005.
Most of the $183.6bn of FDI inflows into the US - up from $109.8bn in 2005 - went into takeovers of existing firms.
The US was also the biggest foreign investor in OECD countries, with $249bn, followed by France with $115bn. (FT Syndication Service)
LONDON: Foreign direct investment into the world's 30 wealthiest nations is set to rise by 20 per cent this year, thanks to high corporate profits, low interest rates and solid economic growth, the Organisation for Economic Co-Operation and Development said on Thursday.
The increase would come on top of the 22 per cent increase in FDI in 2006 to $910bn. This was the third consecutive annual rise and the highest figure since 2000, the Paris-based body said in a report published on Thursday.
The report noted that the average value of M&A deals in the first five months of the year was the highest on record for inward and outward transactions: "If the months January through May are indicative of the year 2007 as a whole, then the total value of cross-border M&As in OECD countries will exceed $1 trillion [$1,000bn] for only the second time in history."
The OECD said FDI last year had been underpinned by a small number of very large cross-border merger & acquisition deals. The top five deals totalled $120bn and included the $32bn takeover of Arcelor, the Luxembourg-based steel maker by Mittal Steel of the Netherlands and the $31bn acquisition of 02, the UK telecommunications company by Spain's Telefonica.
Another interesting trend was the emergence of large investors from emerging economies. It cited India's Tata Steel, which took over the Anglo-Dutch Corus group to form the world's fifth biggest steel firm and Brazil's CVRD, which became the world's second-largest min ing company, thanks to its acquisition of Canada's Inco.
Such acquisitions has led to a rise in hostile attitudes in the host country, noted the OECD. "The takeover of prized national enterprises is controversial in most countries," it said. Although some countries had tightened their practices toward inward FDI on grounds of national security: "On balance, however, the negative political undercurrents have not yet translated into a slowdown of direct investment flows. On the contrary, FDI is booming."
The US reclaimed its position as the world's largest recipient of foreign direct investment in 2006, partly as a result of a weaker dollar, after being knocked off its customary perch by the UK in 2005.
Most of the $183.6bn of FDI inflows into the US - up from $109.8bn in 2005 - went into takeovers of existing firms.
The US was also the biggest foreign investor in OECD countries, with $249bn, followed by France with $115bn. (FT Syndication Service)