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Hong Kong's external direct investment (DI) statistics for 2009 are released today (December 9) by the Census and Statistics Department (C&SD).
Stocks of Inward and Outward DI
At the end of 2009, the stock of Hong Kong's inward DI increased by 14.8% from a year earlier to $7,262.1 billion at market value. Its ratio to GDP stood at 445% in 2009. The increase in the stock of Hong Kong's inward DI in 2009 was mainly attributable to a rise in market values of Hong Kong affiliates of foreign enterprises and the positive DI inflow to these Hong Kong affiliates.
Analysed by immediate source of investment, the mainland of China (the Mainland) accounted for the largest share of the total stock at end 2009, at 36.4%, reflecting the importance of investment from the Mainland in Hong Kong. Mainland's 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 transportation, storage, postal and courier services.
Other major immediate sources of investment included the British Virgin Islands (BVI) and the Netherlands, accounting for 32.4% and 6.8% respectively of the total stock of Hong Kong's inward DI at end 2009.
Analysed by economic activity of Hong Kong enterprise groups (HKEGs) having received inward DI, those engaged in investment holding, real estate, professional and business services attracted the largest share of 65.9% of the total stock at end 2009. This was followed by banks and deposit-taking companies, at 10.9%; and import/export, wholesale and retail trades, at 10.4%.
At the end of 2009, the stock of Hong Kong's outward DI increased by 9.3% from a year earlier to $6,453.7 billion at market value. Its ratio to GDP was 395% in 2009. The increase in the stock of outward DI was mainly attributable to the positive DI outflow to foreign affiliates of Hong Kong enterprises and the increase in market values of these foreign affiliates.
Analysed by immediate destination of investment, the BVI was the most important destination for Hong KongĄ¯s outward DI, with a share of 43.8% of the total stock at end 2009.
The Mainland was the second largest, accounting for 42.3% of the total stock of Hong Kong's outward DI at end 2009. Guangdong Province remained a popular location for Hong Kong's investment in the Mainland, accounting for 31.1% (or $848.6 billion) of the total stock of Hong Kong's outward DI to the Mainland. The most common economic activities undertaken by Hong Kong's direct investment enterprises in the Mainland were information and communications; investment holding, real estate, professional and business services; and manufacturing.
Analysed by economic activity of HKEGs having made outward DI, those engaged in investment holding, real estate, professional and business services took up the largest share, at 73.0% of the total stock at end 2009. This was followed by import/export, wholesale and retail trades, at 8.9%; and banks and deposit-taking companies, at 4.1%.
Flows of Inward and Outward DI
In 2009, total DI inflow amounted $406.1 billion, smaller than the $464.3 billion in 2008. The Mainland was the most important supplier of Hong Kong's DI inflow in 2009, amounting to $192.3 billion. The BVI came next, at $126.5 billion. Analysed by economic activity of HKEGs receiving DI inflow, those engaged in investment holding, real estate, professional and business services took up the largest share of the total DI inflow in 2009, at $234.3 billion.
On the other hand, total DI outflow in 2009 amounted to $496.0 billion, larger than the $393.9 billion in 2008. The BVI accounted for a predominant part of Hong Kong's DI outflow in 2009, at $223.0 billion. Analysed by economic activity of HKEGs making DI outflow, those engaged in investment holding, real estate, professional and business services was the most prominent supplier, amounting to $358.0 billion.
Taking DI inflow and outflow together, a net outflow of $89.9 billion was recorded in 2009.
Commentary
A Government spokesman says that the stocks of inward and outward direct investment at end-2009 rose notably over a year earlier, amid the economic recovery and the rebound in the stock markets around the world. The spokesman points out that the ratios of inward and outward direct investment to the size of the Hong Kong economy stood at 445% and 395% respectively, continuing to reflect Hong Kong's position as a regional business hub and an international financial centre.
The spokesman notes that the Mainland continued to feature prominently in Hong Kong's external direct investment, both as a source and a destination, covering a wide range of economic activities. Looking ahead, investment ties between the Mainland and Hong Kong should strengthen further with the rapid economic integration between the two places. The Government will also continue to promote economic links with other parts of the world, particularly the emerging markets.
Further Information
DI represents investment which allows investors in one economy to have a lasting interest and a significant degree of influence or an effective voice in the management of an enterprise in another economy. For statistical purpose, an effective voice is taken as equivalent to a holding of 10% or more of the equity in an enterprise.
Hong Kong compiles DI statistics in conformity with the prescriptions in the Fifth Edition of the Balance of Payments Manual of the International Monetary Fund (IMF). The DI statistics are compiled on the basis of data obtained from the Survey of External Claims, Liabilities and Income (SECLI), supplemented by data from other sources.
Tables 1 and 2 show the stock and flow of inward DI in Hong Kong for 2008 and 2009, with breakdowns by major country/territory and by economic activity of HKEGs respectively. Similar statistics on outward DI from Hong Kong for 2008 and 2009 are presented in Tables 3 and 4.
The classification of economic activity of HKEGs follows the Hong Kong Standard Industrial Classification (HSIC), which is used in various economic surveys for classifying economic units into different industry classes. Upon the implementation of the new HSIC Version 2.0 by the C&SD in October 2008, the new classification has been adopted in compiling the DI statistics. Starting from the reference year of 2009, all the DI statistics, unless otherwise specified, are compiled based on the HSIC Version 2.0. The series of DI statistics under the HSIC Version 2.0 has also been backcasted to 2004.
Further details of DI statistics for 2009 are published in the report "External Direct Investment Statistics of Hong Kong 2009". Users can download this publication free of charge at the website of the C&SD (www.censtatd.gov.hk/products_and_services/products/publications/statistical_report/index.jsp).
Enquiries about the DI statistics may be directed to the Balance of Payments Branch (2) of the C&SD at 2116 5150.
Ends/Thursday, December 9, 2010
Issued at HKT 16:32
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