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Hong Kong's Inward FDI Soars

by Mary Swire, Tax.News.com, Hong Kong

13 December 2011


Recently released figures show that, at the end of last year, the stock of Hong Kong's inward foreign direct investment (FDI) increased by 16.7% from a year earlier, to almost HKD8.5 trillion (USD1.09 trillion) at market value.

The increase in the stock of Hong Kong's FDI in 2010 was mainly attributable to a positive FDI inflow into Hong Kong, and a rise in the total market value of Hong Kong enterprise groups (HKEGs) that have previously received such investment. In 2010, the total FDI inflow amounted to over HKD550bn, larger than the HKD406bn seen in 2009.

Analyzed by immediate source of investment, the Mainland of China accounted for the largest share of the total stock at end-2010, at 36.9%, reflecting the importance of investment from mainland China into Hong Kong. Its investment in Hong Kong covered a wide range of economic activities, including investment holding, real estate, professional and business services, import/export, wholesale and retail trades, and banking.

Other major immediate sources of investment included the British Virgin Islands (BVI) and the Netherlands, accounting for 32.5% and 7.1% respectively.

Analyzed by economic activity of HKEGs having received inward FDI, those engaged in investment holding, real estate, and professional and business services took up the largest share, at 66.5% of the total stock at end-2010. This was followed by banking, at 12.1%, and import/export, wholesale and retail trade, at 9.7%.

By the end of 2010, the stock of Hong Kong's outward FDI increased by 12.8% from a year earlier to HKD7.3 trillion at market value. Analyzed by the immediate destination of investment, the BVI was the most important destination for Hong Kong's outward FDI, with a share of 43.1% of the total stock.

Mainland China was the second-largest, accounting for 42.2% of the total stock of Hong Kong's outward FDI at end-2010. Guangdong Province remained a popular location for Hong Kong's investment in China, accounting for 30% (or HKD920bn).

Looking ahead, it was said that investment ties between China and Hong Kong should strengthen further with the deepening economic integration between the two places and the rapid development of offshore renminbi business in Hong Kong. Meanwhile, the government confirmed that it will continue to foster economic links with other parts of the world, particularly the emerging markets.

A comprehensive report in our Intelligence Report series giving a country-by-country analysis of offshore investment funds, stock exchanges and trusts, with an analysis of the US QI regime, is available in the Lowtax Library at http://www.lowtaxlibrary.com/asp/subs_reports.asp and a description of the report can be seen at http://www.lowtaxlibrary.com/asp/description_report9.asp
TAGS: investment | business | holding company | Netherlands | foreign direct investment (FDI) | financial services | capital markets | real-estate | equity investment | China | Virgin Islands | offshore | Hong Kong | British Virgin Islands | services

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