Global foreign investment built up new recovery momentum in June as governments across many geographies lifted most of their more stringent restrictions on domestic and cross-border movement, giving stalling project decisions a better chance of advancing.
In June, the fDi Index – which tracks foreign investor sentiment – strengthened the momentum that first surfaced, albeit timidly, in the previous month.
The index scored a reading of 779 in June and is now 77% higher than the historic low of 439 that it scraped at the height of the pandemic in April, according to greenfield investment monitor fDi Markets.
The index is also gradually returning to pre-Covid levels, with June’s reading just 15.7% lower than that of June 2019, which marks the narrowest year-on-year differential since Covid-19 started rattling markets and investors in March, fDi figures show.
“We are about to receive our first delegation of investors in months,” Raido Lember, the director of Invest in Estonia, told fDi with a sense of relief at the beginning of June.
Some sectors that depend heavily on site visits made a strong comeback in June: first and foremost being real estate. Foreign investors announced 70 new projects for the sector, more than twice as much as in May and the highest monthly figure since the beginning of 2020, fDi Markets figures show. Spain in particular saw a flurry of new projects being announced, mainly in the logistics and residential segments.
Investors in the communications sectors also registered strong activity in June too, when they announced 66 projects – an almost threefold increase from the lows touched in April, according to fDi Markets. Among others, Google launched a new $1.5bn cloud region in Warsaw, Poland, following in the footsteps of Microsoft, which unveiled its Polish cloud region a month earlier.
The renewable energy sector posted another strong month, with both announced projects (52) and pledged capital investment ($12.6bn) remaining close to historic highs. A consortium comprising EDF of France, Enbridge of Canada and Germany’s Wpd launched the development of a 500 megawatt offshore wind farm in the English Channel on June 2, with total costs budgeted at €2bn.
Meanwhile, Hong Kong-based Panda Green Energy unveiled a $1.4bn solar photovoltaic and solar thermal power project in China’s westernmost province of Xinjiang.
Conversely, investment has all but dried up in some of the sectors most affected by the Covid-19 crisis. Just a handful of projects have been announced across major FDI sectors such as automotive (8), leisure and entertainment (6), and aerospace (5).