External direct investment of Hong Kong in 2016
External direct investment of Hong Kong in 2016
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     Hong Kong's external direct investment (DI) statistics for 2016 were released today (December 11) by the Census and Statistics Department (C&SD).

Positions of DI

     At the end of 2016, the position of Hong Kong's DI liabilities increased by 3.2% over a year earlier to $14,142.2 billion. Its ratio to the Gross Domestic Product (GDP) stood at 568% in 2016. The increase in the position of Hong Kong's DI liabilities in 2016 was mainly attributable to the positive DI inflow to Hong Kong during the year.

     Analysed by immediate source of investment, the British Virgin Islands (BVI) was the most important source for Hong Kong's inward DI, with a share of 34.2% of the total position of Hong Kong's inward DI at end-2016.

     The mainland of China (the Mainland) was the second largest source of investment, accounting for 25.7% of the total position of Hong Kong's inward DI at end-2016. The Mainland's investment in Hong Kong covered a wide range of economic activities, including investment and holding, real estate, professional and business services; banking; construction; and import/export, wholesale and retail trades.

     Analysed by major economic activity of Hong Kong enterprise groups (HKEGs) which had received inward DI, those engaged in investment and holding, real estate, professional and business services took up the largest share, at 67.5% of the total position of Hong Kong's inward DI at end-2016. This was followed by banking, at 11.9%; and import/export, wholesale and retail trades, at 9.9%.

     At the end of 2016, the position of Hong Kong's DI assets increased by 2.2% over a year earlier to $13,526.9 billion. Its ratio to GDP was 543% in 2016. The increase in the position of DI assets in 2016 was mainly attributable to the positive DI outflow from HKEGs to enterprises outside Hong Kong during the year.

     Analysed by immediate destination of investment, the Mainland was the most important destination for Hong Kong's outward DI, with a share of 40.2% of the total position of Hong Kong's outward DI at end-2016. Guangdong Province remained a popular location for Hong Kong's investment in the Mainland, accounting for 27.6% (or $1,332.8 billion) of the total position of Hong Kong's outward DI in the Mainland. The most common economic activities undertaken by Hong Kong's direct investment enterprises in the Mainland were information and communications; investment and holding, real estate, professional and business services; manufacturing; and banking.

     The BVI was the second largest destination of investment, accounting for 38.8% of the total position of Hong Kong's outward DI at end-2016.

     Analysed by major economic activity of HKEGs which had made outward DI, those engaged in investment and holding, real estate, professional and business services took up the largest share, at 78.7% of the total position of Hong Kong's outward DI at end-2016. This was followed by import/export, wholesale and retail trades, at 7.6%; and banking, at 2.5%.

Flows of DI

     In 2016, total DI inflow amounted to $1,034.1 billion, smaller than that of $1,403.6 billion in 2015. On the other hand, total DI outflow in 2016 amounted to $586.4 billion, smaller than that of $608.8 billion in 2015. Taking the inflow and outflow together, a net DI inflow of $447.8 billion was recorded in 2016.

     Analysed by immediate source of inward DI, the Mainland was the major source of Hong Kong's DI inflow in 2016, amounting to $256.8 billion. The BVI came next, at $240.7 billion. Analysed by major economic activity of HKEGs which had received DI inflow, those engaged in investment and holding, real estate, professional and business services attracted the largest amount of DI inflow in 2016, at $509.2 billion.

     Analysed by immediate destination of outward DI, the Mainland accounted for a predominant share of Hong Kong's DI outflow in 2016, at $234.9 billion. Analysed by major economic activity of HKEGs which had made DI outflow, those engaged in investment and holding, real estate, professional and business services took up the largest amount of DI outflow, at $372.4 billion.

Commentary
      
     A Government spokesman said that, positions of DI liabilities and assets at end-2016 in Hong Kong were higher than their year-ago levels, as the global economy gradually improved over the course of the year. The positions of DI liabilities and assets remained large relative to the size of the economy, at 568% and 543% of Hong Kong's GDP respectively, reflecting Hong Kong's position as an international financial and business hub.

     The spokesman noted that the Mainland continued to feature prominently in Hong Kong's external DI, both as a source and as a destination. Looking ahead, considering the Mainland's continuous efforts in opening up, coupled with Hong Kong's business friendly environment, there is notable potential for growth of investment activities between the two places. The Government will continue to strengthen Hong Kong's linkages with its global economic partners and strive to seize opportunities brought by the Belt and Road Initiative and the Guangdong-Hong Kong-Macao Bay Area development.

Further Information

     DI represents external investment in which an investor of an economy acquires a lasting interest and a significant degree of influence or an effective voice in the management of an enterprise located in another economy. For statistical purpose, an effective voice is taken as being equivalent to a holding of 10% or more of the voting power in an enterprise.

     The DI statistics are compiled based on data obtained from the Survey of External Claims, Liabilities and Income conducted by the C&SD, supplemented by data from other sources.

     According to the latest international statistical standards stipulated in the "Sixth Edition of the Balance of Payments and International Investment Position Manual" released by the International Monetary Fund and the "Fourth Edition of Benchmark Definition of Foreign Direct Investment" published by the Organisation for Economic Co-operation and Development, the aggregate DI figures (including DI assets and DI liabilities) presented above are compiled based on the "asset/liability principle", while detailed DI figures analysed by country/territory and by major economic activity of HKEGs presented above are based on the "directional principle". Owing to the adoption of different presentation principles, the aggregate DI figures are different from the overall totals of the detailed DI figures by country/territory or by major economic activity of HKEGs. However, the overall direct investment balance compiled from figures based on these two presentation principles is the same.

     Tables 1 and 2 show the positions and flows of inward DI in Hong Kong by selected major investor country/territory and by major economic activity of HKEGs respectively for 2015 and 2016. Similar statistics on outward DI from Hong Kong by selected major recipient country/territory and by major economic activity of HKEGs for 2015 and 2016 are presented in Tables 3 and 4.

     Further details of DI statistics for 2016 are given in the report "External Direct Investment Statistics of Hong Kong 2016". Users can download this publication free of charge at the website of the C&SD (www.censtatd.gov.hk/hkstat/sub/sp260.jsp?productCode=B1040003).

     Enquiries about the DI statistics may be directed to the Balance of Payments Branch (2) of the C&SD at 3903 7024.
 
Ends/Monday, December 11, 2017
Issued at HKT 16:30
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