In 2008, the financial and business services sector has been at the forefront of the news headlines, primarily for the wrong reasons. However, according to fDi Intelligence, the financial and business services sector continued to perform well in terms of greenfield FDI in 2008. FDI in this sector has grown year on year since 2003 by an average of 20%, with 2006 seeing the biggest jump of 39% in project numbers.

In the period from January to November 2008, projects numbers were up by 40% to 2516 when compared with the same period in 2007. Capital investment was also up by 36% to an estimated $62.5bn and the number of jobs created by this sector increased by 30% to more than 225,000 estimated jobs in 2008.

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The majority of FDI in the financial and business services sector occurred in the months of May to July, with August experiencing a significant fall.

By the numbers

Since January 2003, fDi Intelligence has tracked 9941 FDI projects globally in the financial and business services sector, which accounted for an estimated $233bn and the creation of more than one million jobs. The number of projects in this sector accounted for 15% of global FDI since January 2003, followed by the software and IT sector (11%).

China is the top destination for financial and business services FDI, attracting 1016 projects from January 2003 to November 2008, 10% of all projects. This is followed by the UK, which attracted 7% and India with 6%. The United Arab Emirates (UAE) has been a hot spot for the financial and business services sector, attracting 435 projects over the same six-year period. Significantly, 2008 accounted for one-third of these projects and saw the UAE overtaking the US and drawing close to the UK as a destination country for the sector. The US is the clear leader as a source market, accounting for 27% of all projects, followed by the UK with 15%.

The top destination for financial and business services headquarters is London (24 projects), followed by Dubai (18), Dublin (nine), Shanghai (six) and Beijing (six), a clear indication that London is one of the top financial capitals in the world.

Given that the US and the UK are the top source countries for financial and business services FDI, it is to be expected that the top company investing globally in this sector is HSBC from the UK. HSBC accounted for 210 projects, followed by Citigroup (US), which accounted for 107 projects. Together, the top 10 companies account for 8% of global projects from January 2003 to November 2008.

The top motive for setting up financial and business services FDI in the destination countries is domestic market growth potential (31%) and second to this is the proximity to markets or customers (27%).

The financial sector has continued to thrive in 2008 in terms of FDI but 2009 looks set to see a different trend, perhaps with new destinations emerging as preferred FDI locations.

Dr Henry Loewendahl is product director for fDi Intelligence.

E-mail: henry.lowendahl@ft.com

TOP DESTINATION CITIES THAT ATTRACTED HEADQUARTERS IN THE FINANCIAL AND BUSINESS SERVICES SECTOR BY NUMBER OF FDI PROJECTS (JAN 2003-NOV 2008)

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Source: fDi Intelligence

 

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Global number of FDI Projects AND Capex Investment in the Financial and Business Services Sector (Jan-Nov 2008)