Global foreign direct investment (FDI) announcements expanded in June, as technology and business services firms set out expansion plans and the Asian economies saw an influx of investment projects.
Foreign investors announced 1348 FDI projects in June, an increase of 39% on the previous year, thanks to a spike in projects unveiled by companies engaged in software, IT and business services.
Preliminary data for the first half of 2022 indicates FDI projects were 3.8% lower than a year earlier. However, over the same period, an increase in announced mega-projects — investment worth at least $1bn — contributed to a 26% rise of capital expenditure (capex) to $401.5bn.
Early indications of future investment in June were muted. Investor signals — a major component of the fDi Index and indicator of company expansion plans on the horizon — stood at 376 in June, below the monthly average of 393 in the first half of 2022.
The largest number of projects in June were announced by software and IT services companies. Chinese social media platform TikTok announced plans to hire 1000 new staff in Ireland, taking its total headcount up to 3000 in the country.
Meanwhile, German automotive parts supplier ZF Friedrichshafen expanded its technology centre in Hyderabad, India focusing on artificial intelligence (AI) applications and digitalisation. A recent fDi Benchmark study found that Hyderabad was the world’s most attractive city to set up AI-related operations.
A spike of investment into India, as well as Singapore, helped the whole Asia-Pacific region attract more projects in June, compared with the same month of 2021.
Meanwhile, Africa received its largest monthly total of projects since December 2019, thanks in large part to an increase in both Egypt and South Africa.
Several large investments were announced in Morocco, too. Swiss semiconductor company STMicroelectronics invested $224m to expand its plant in Bouskoura. It has added a new production line specialised in silicon carbide products for electric vehicles.
Energy heats up
Amid ongoing supply chain issues, the freight and distribution services among the sub-sectors saw the largest increase in projects between June 2022 and 2021.
Renewable energy investors continued their capital spending spree too. At its refinery in the port of Rotterdam, Finnish oil company Neste is set to invest $2bn to expand its renewable products capacity.
Oil and gas sector made a massive comeback in June too, with almost $20bn dedicated to new foreign investments. This comes amid rising fossil fuel prices and concerns over supply as countries reduce their reliance on Russia after its invasion of Ukraine.
The vast majority of the investment came from the world’s largest liquified natural gas (LNG) project in Qatar. The Gulf state’s oil and gas company QatarEnergy is set to invest $28.75bn to expand the North Field East through a number of joint ventures with international oil companies. These include US-based ConocoPhillips and Exxon Mobil, Italy’s Eni and France’s Total.
US booming investment
The world’s largest economy continues to see a flurry of investment activity. Some 282 US inter-state projects — domestic investments announced by companies based in another US state — were tracked in June, the highest monthly total since mid-2021.
This includes Texas-based Arbor Renewable Gas’s plans to invest $800m into a manufacturing and distribution facility in Louisiana for gasoline from wood waste biomass.
In June, the US also maintained its position as the leading FDI destination globally. Danish toy maker Lego is set to invest over $1bn to build a new factory in Chesterfield County, Virginia.
Meanwhile in North Dakota, Norway-based Bitzero Blockchain announced it will establish a new 50-megawatt data centre with an interpretive centre and additional community engagement. Bitzero expects to invest a total of $500m.