12/05/2017 - 15:16

Belgium, Luxembourg grow Aussie interests

12/05/2017 - 15:16

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Belgium and Luxembourg have been among the biggest contributors to growing overseas investment in Australia, as the level of foreign-owned assets in Australia doubled in the past 10 years to hit nearly $3.2 trillion at the end of calendar 2016.

Belgium, Luxembourg grow Aussie interests
Direct investment, or financial flows to fund equity stakes of more than 10 per cent in businesses, increased 108 per cent to $796 billion. Photo: Attila Csaszar

Belgium and Luxembourg have been among the biggest contributors to growing overseas investment in Australia, as the level of foreign-owned assets in Australia doubled in the past 10 years to hit nearly $3.2 trillion at the end of calendar 2016.

The latest Australian Bureau of Statistics report into Australia’s international investment position, released this week, showed the total level of foreign investment in Australia had increased 105 per cent since 2006.

Direct investment, or financial flows to fund equity stakes of more than 10 per cent in businesses, increased 108 per cent to $796 billion, while flows into financial derivatives grew 300 per cent, to $212 billion.

Portfolio investment, meaning both debt flows and equity stakes below 10 per cent of a target, grew 80.5 per cent to $1.66 trillion.

Investors from Belgium and Luxembourg posted more than 10-fold growth in their investment levels in Australia in the decade to 2016.

From a base of just $24.2 billion in 2006, investment from Belgian entities grew over the decade to be $270 billion in 2016, with about $23 billion of growth in the 2016 calendar year alone.

Investors from Luxembourg also grew their Australian holdings rapidly, from $5.7 billion in 2006 to $74 billion at the end of 2016.

More traditional investment sources retained their positions as Australia’s biggest funders.

Investors from the US are still by far the biggest foreign holders of Australian assets, at $860 billion last year, an increase of 124 per cent on the level just 10 years prior.

Notable, however, there was a fall in US holdings of 1.9 per cent in 2016, down from an all time record of $877 billion in 2015.

Australia’s second biggest capital source is the UK, with UK investors having assets of about $515 billion in Australia.

That grew by a comparatively modest 43 per cent in the decade from 2006.

Asian countries also feature in a major way.

As would be widely expected, China led the charge, with that country’s stock of investment growing nearly 25-fold, from $3.5 billion in 2006 to $87.2 billion at the end of the 10-year period.

In 2016, investment grew about $11 billion, with direct investment up $5 billion to $42 billion.

That number is much lower than the $16 billion level predicted by KPMG in a recent report into Chinese direct investment, however.

The stock of assets owned by Japanese investors more than quadrupled in the decade to 2016, to $213.5 billion.

The inflow in 2016 itself was about $12.8 billion, an increase of 6.3 per cent.

It was a similar story with South Korea, with investment from entities in that country up 376 per cent to $23.6 billion over the decade to 2016.

Year-on-year growth was very low, however, just 0.9 per cent in 2016.

From Hong Kong, investment increased 160 per cent in the decade, to $101 billion, while year on year growth was 17.5  per cent.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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