Global foreign direct investment (FDI) kept pace in June, as major expansion campaigns were announced by companies serving digitisation and technology adoption across industries.
The fDi Index, which tracks foreign investors’ sentiment, stood at 823 points in June, an increase of 5.7% from a year earlier, but down from the high annual percentage rises seen in recent months, according to the latest figures from fDi Markets. June still recorded the second-highest index score since February 2020, before the World Health Organization (WHO) classified Covid-19 as a pandemic.
The number of greenfield FDI projects announced worldwide by foreign investors were stable at 970 in June, the same level as a month earlier, fDi Markets data show.
Widening the time horizon to the first six months of the year, preliminary data indicates capital expenditure (capex) in the first half of 2021 lagged the same period of last year. Foreign investment projects worth an estimated $234.9bn were announced between January and June, currently down by 19.9% from the same period last year, according to the latest data from fDi Markets. This is in part due to pre-pandemic levels of investment in the first two months of 2020.
Signs of investment on the horizon spiked to their highest level on record. Investor signals — which give an early indication of future investment plans and are a major component of the fDi Index — reached 481 in June, beating the previous record set in April.
Hardware drives Asia gains
Mega projects into hardware manufacturing helped the Asia-Pacific region post the largest increase in capex between June 2020 and 2021. China-based solar module manufacturer Risen Energy is set to build a $10.1bn facility in Kulim Hi-tech Park, Malaysia, in the most capital-intensive project in the electronic components sector ever recorded by fDi Markets.
Global semiconductor players announced large-capacity expansions too. Austria’s AT&S will invest €1.7bn into a new facility at Kulim Hi-tech park, where it will produce printed circuit boards (PCBs) and integrated circuit (IC) substrates.
“Besides manufacturing of high-tech products, a significant amount of research and development activities will be executed at this new location,” Andreas Gerstenmayer, chief executive of AT&S said in a statement. “Malaysia can benefit its position as a tech country and can strengthen the region as a high-tech manufacturing hub.”
Elsewhere in Southeast Asia, chipmaker GlobalFoundries will open a $4bn foundry on its existing campus in Singapore to meet growing demand for semiconductors amidst an ongoing supply crunch.
Real estate gains
In June, the real estate sector saw pledged capital rise year-on-year by more than $3.4bn. In Neom, Saudi Arabia’s futuristic city state, UK-based developer Gulf Development International is set to establish a $1bn volumetric modular assembly plant, while US-based hospital operator Cleveland Clinic will invest almost $1bn into a new clinic in London.
In terms of project numbers, the data processing, hosting and related services sub-sector recorded the highest rise in June, compared to the same month of 2020. Cloud computing giants — including Google, Amazon, Alibaba and Tencent — are all set to open new data centres, while video communication platform Zoom opened a new facility in Quintana Roo, Mexico.
US-based Equinix also announced a huge expansion of its global hyperscale data centre portfolio as part of its $6.9bn joint venture with Singapore’s sovereign wealth fund, GIC.
On a geographical basis, Russia and Mexico saw the largest increase in project numbers in June, compared with the same month of 2020.
Meanwhile, US-based investors increasingly looked for opportunities abroad. Interstate projects — domestic investments made by a company based in another US state — in June made up their lowest proportion of total US company investments since January this year.