Hong Kong retained its position as Asia's second largest destination for foreign direct investment (FDI), according to the "World Investment Report 2007," released by the United Nations Conference on Trade and Development (UNCTAD) in October.
Hong Kong attracted FDI valued at US$42.9 billion during the 2006 calendar year, an increase of 28 percent on the previous year.
Together with the Mainland of China, which was the largest FDI recipient, the two economies accounted for more than half of FDI inflows into the region last year. The Mainland of China attracted FDI worth US$69 billion, a 4 percent decline on the previous year.
According to the report, the next largest FDI recipients among Hong Kong's neighboring economies were Singapore (US$24.2 billion), India (US$17 billion), Thailand (US$9.8 billion) and Taiwan (US$7.4 billion).
On a global scale, Hong Kong ranked seventh in FDI inflows in 2006, up from eighth place the previous year, with cross-border merger and acquisition (M&A) activity fuelling the rise.
For the third consecutive year, global FDI inflows rose substantially. Total FDI flows reached US$1.306 trillion, up 38 percent from 2005. According to the report, the rise was driven by increasing corporate profits worldwide and buoyant stock markets which raised the value of cross-border M&A.
The report predicted that FDI flows would continue to rise in 2007, although at a slower pace.
M&A activities would drive cross-border investment, with the report highlighting that M&A activity in the first half of 2007 was already valued at US$581 billion, or a 54 percent increase year on year.
Director-General of Investment Promotion, Mike Rowse, commented that the UN report confirmed Hong Kong's status as an international location for foreign companies and capital. He said it demonstrated that Hong Kong continued to "act as a two-way springboard for overseas companies and capital into Mainland China, and for Mainland companies expanding into international markets."
The UN report coincides with the release of half-yearly FDI data by the Hong Kong government's Census and Statistics Department. According to the department's data, Hong Kong attracted US$27.1 billion in the first half of 2007, up more than 31 percent over the same period last year.
