Global foreign direct investment (FDI) stabilised in July, as capital flowed into the construction of logistics hubs catering to e-commerce growth and new electricity projects in line with the green transition.

The fDi Index, which tracks foreign investors’ sentiment, stood at 784 points in July, a decline of 1.4% from a year earlier, according to the latest figures from fDi Markets. This score is significantly higher than the lows recorded in the final quarter of 2020, and in line with the average monthly score seen in the second quarter of 2021.

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Foreign investors announced 935 greenfield FDI projects worldwide in July, down slightly from the 970 projects tracked in the previous two months, fDi Markets figures show.

There are continuing signs of company expansions in the pipeline too. Investors signals — a major component of the fDi Index that give an early indication of future investment plans — stood at 432. This is the third-highest score on record, but down slightly from the all-time high of 481 tracked in June. 

Solar pushes renewables higher

Renewable energy attracted more capital than any other sector in July, as projects worth over $10bn were announced, with more than half of the capital going towards solar energy production.

In Batam, Indonesia a $2bn floating solar project with more than 4000MWh of storage was announced by Singapore-based Sunseap. Elsewhere, renewable energy company Masdar, a subsidiary of UAE-based sovereign wealth fund Mubadala, won a tender for a 200MW utility-scale solar project in Armenia.

“This is a vital stage in Armenia’s clean energy journey: low-cost solar energy will help power new industries, generate jobs and set the country on the path to a prosperous and truly sustainable future,” Mohamed Jameel Al Ramahi, CEO of Masdar, said in a statement.

In the US, Vineyard Wind — a joint venture between Denmark-based Copenhagen Infrastructure Partners and Spain-based Avangrid Renewables — is set to invest €1.3bn into an 804MW wind farm off the coast of Connecticut.

Logistics leads

Construction projects worth more than $4.8bn were also announced in July, driven primarily by logistics and distribution centres aiming to serve shifting supply chains and e-commerce growth. 

In the UK, Canada-based commercial developer Oxford Properties Group plans to invest £1bn into a logistics hub, with an associated rail freight terminal, near Birmingham.

“Logistics remains one of our highest conviction calls globally, benefitting from substantial undersupply of prime new space while the growth of e-commerce and demand for expedited supply chains continues unabated, accelerated by the effects of Covid-19,” James Boadle, head of logistics and residential for Europe at Oxford Properties, said in a statement.

Investment into the metals sector also spiked in July, with projects worth almost $2bn announced worldwide. In Romania, Italian metal product manufacturer Beltrame will invest €300m into a rebar and wire rod plant, while Australia-based Sandfire will construct a copper and silver mine in Botswana. The latter project is expected to create 600 full-time jobs.

The most capital-intensive project announced in July was by Taiwan-based TSMC, the world’s largest contract chipmaker, which plans to invest $2.89bn to expand its plant in Nanjing, China. Production in the expanded plant is set to start in the second half of 2022, with monthly capacity expected to reach 40,000 units by mid-2023. 

China rebound

While greenfield FDI into China hit a historic low in the first half of this year, July was the first month of 2021 where foreign capital in China increased, compared with the corresponding month of 2020.

On a regional basis, Western Europe saw the highest increase in investment, with $5.6bn more announced in July 2021, compared with a year earlier, followed by Asia-Pacific ($3.2bn) and North America ($2.6bn).

US-based investors balanced their expansion plans at home and abroad. Some 236 interstate projects — domestic investments made by a company based in another US state — were recorded in July, compared with 201 projects abroad. This marks the lowest proportion of cross-border investments made by US-based investors since the beginning of 2021.