A ‘flight to safety’ has boosted advanced economies in AT Kearney’s FDI Confidence Index, a regular assessment of senior executive sentiment at the world’s largest companies. But investor outlook remains highest for emerging market giants Brazil, China and India.
China remains the top-ranked destination by foreign investors, a title it has held since 2002. The US retook second place from India, which had surpassed it in 2005. India, Brazil and Germany complete the top five favoured investment destinations in the 2010 index. Overall, developed economies rose in the index as investors looked for safety. The most striking exception was the UK, whose reliance on financial services left it exposed in the current crisis.
“The results indicate a return to market fundamentals and a flight to quality for corporate executives,” said Paul A Laudicina, AT Kearney managing officer and chairman. “Companies are looking for the antidote to uncertainty and increasingly looking to invest in the near abroad.”
Closer scrutiny of supply chains has also affected corporate location patterns, he said. Two-thirds of executives surveyed said they have changed their supply chain strategy over the past year. Examples of supply chain changes most frequently cited include relocating production to lower cost locations, investing in better quality and decreasing the number of production locations.
Despite an improved performance from many advanced economies in the index, investors expressed the most optimism about the future outlook of the emerging-market giants – China, India and Brazil. Brazil has been on an upward trajectory since 2004 and has now reached the top five for the first time since 2001.