Global FDI down in 2018 due to government interventions, Trump, Brexit: U.N.




  • In Business
  • 2019-06-12 17:43:45Z
  • By By Tom Miles
FILE PHOTO: Containers are seen at a port in Ningbo, Zhejiang
FILE PHOTO: Containers are seen at a port in Ningbo, Zhejiang  

By Tom Miles

GENEVA (Reuters) - Global foreign direct investment (FDI) fell by 13 percent last year because of government intervention, Brexit uncertainty and U.S. President Donald Trump's tax and trade policies, the United Nations trade and development agency UNCTAD said on Wednesday.

UNCTAD forecasts a modest recovery of 10% this year, though with high uncertainty, since several of the policies that have dampened investment enthusiasm are still in place, and there is no sign of an end to technological rivalry between major powers.

"The Cold War that underpins technological competition is not going to be over in the next few years," UNCTAD Secretary-General Mukhisa Kituyi told reporters, referring to the rivalry between China and the United States.

FDI, comprising cross-border mergers and acquisitions (M&A), intra-company loans and investment in start-up projects abroad, is a bellwether of globalisation and a potential sign of growth of corporate supply chains and future trade ties.

In 2018, FDI into developed countries totalled $557 billion, the lowest since 2004, while a record 54% of the total went to developing countries.


NATIONAL SECURITY CONCERNS

Policies rather than economic factors put the brakes on FDI spending, UNCTAD investment chief James Zhan said, including Trump's tax reform, which encouraged U.S. firms to repatriate earnings, effectively sucking FDI out of foreign projects.

Preliminary UNCTAD figures in January suggested that effect might be even bigger than it turned out to be, but after withdrawing $400 billion in the first half of 2018, some companies started looking afresh at foreign deals.

A second dampener on FDI was big countries blocking deals for national security reasons and for dominance of emerging strategic industries.

UNCTAD found 22 deals worth $50 million or more that were blocked in 2018, worth $150 billion in all, equivalent of 12 percent of global FDI.

The largest was a proposed $117 billion takeover of U.S. chipmaker Qualcomm by Singapore's Broadcom, which Trump blocked for national security reasons, UNCTAD said.

This year the trend has continued, while the United States has stepped up its technology battle by trying to thwart the takeup of 5G mobile phone technology developed by Chinese telecoms giant Huawei, which Kituyi said was "at the very centre and embodies the main features of the emerging technology war".

But with firms working across so many international borders, it is unclear how the struggle will play out, he said.

China has discouraged outward investment in real estate, cinemas and soccer clubs to prevent capital flight and conserve foreign exchange reserves, restricting some deals and producing a "chilling effect" to discourage others, Zhan said.

FDI was also impacted by a reordering of global assets driven mainly by the U.S.-China trade war, with many export-oriented firms moving out of China to Southeast Asia or India.

The reconfiguration could accelerate with the advent of two major multi-country trade deals, known as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the RCEP (Regional Comprehensive Economic Partnership).

Britain's plan to leave the European Union also weighed.

"Investment flows to the UK declined last year by 36% and it's not just for the UK - the process creates unpredictability and that affects the whole EU market," Zhan said.


(Reporting by Tom Miles; Editing by Gareth Jones)

COMMENTS

More Related News

US restores some aid but vows no more without migrant action
US restores some aid but vows no more without migrant action

The Trump administration said Monday it is easing previously announced cuts in hundreds of millions of dollars in aid to the Central American nations of El Salvador, Honduras and Guatemala but will not allow new funding until those countries do more to reduce migrant flows to the United States. The State Department said that after a review of more than $600 million in assistance that President Donald Trump ordered in March to be cut entirely, it would go ahead with about $400 million in projects and grants that had been previously approved.

Pompeo tries rallying foreign leaders in alleged oil attacks
Pompeo tries rallying foreign leaders in alleged oil attacks

Secretary of State Mike Pompeo is reaching out to wary foreign leaders to frame alleged Iranian attacks in a Middle East oil shipping route as a problem for the world at large, especially for Asian countries vitally dependent on that oil. Pompeo, in a series of Sunday television interviews, emphasized the U.S. international outreach in the wake of what the U.S. says were Iranian attacks Thursday on two oil tankers near the Strait of Hormuz . The world needs to unite," Pompeo said.

Trump to Stephanopoulos:
Trump to Stephanopoulos: 'I Like the Truth,' I Didn't Sit for Mueller Interview Because He'd 'Get Us for Lies'

President Trump appeared to be obsessed with the Mueller report during his wide-ranging interview with ABC News' George Stephanopoulos, insisting that he read the special counsel's report while repeatedly claiming it says there was "no collusion" despite Robert Mueller stating specifically that no determination was reached on the concept of collusion.While speaking to Stephanopoulos in the back of the president's limousine, the president was asked what his pitch to swing voters "on the fence" would be, prompting Trump to quickly pivot to the Russia investigation, which he called a "phony witch hunt.""Mueller comes out-there's no collusion," the president declared. "And essentially a...

Times
Times' Russia report is 'virtual treason,' Trump says

US President Donald Trump on Saturday accused The New York Times of "a virtual act of treason," after it reported the US is stepping up digital incursions into Russia's electric power grid. Current and former government officials have described the classified deployment of American computer

'Who is the a--hole': The congressman who missed his anniversary to keep lawmakers voting until 4 a.m.
'Who is the a--hole': The congressman who missed his anniversary to keep lawmakers voting until 4 a.m.

Rep. Chip Roy kept the House voting until 4 a.m. on Thursday as a form of protest - even though he missed his 15-year wedding anniversary.

Leave a Comment

Your email address will not be published. Required fields are marked with *

Cancel reply

Comments

Top News: Business

facebook
Hit "Like"
Don't miss any important news
Thanks, you don't need to show me this anymore.