External direct investment of Hong Kong in 2020
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     Hong Kong's external direct investment (DI) statistics for 2020 were released today (December 10) by the Census and Statistics Department (C&SD).

Stocks of DI

     At the end of 2020, the total stock of Hong Kong's inward DI (i.e. the position of Hong Kong's DI liabilities) decreased by 1.9% over a year earlier to $15,883.5 billion. Its ratio to the Gross Domestic Product (GDP) stood at 591% in 2020. The decrease in 2020 was mainly attributable to the decrease in the total market values of Hong Kong enterprise groups (HKEGs) which had received DI from abroad, partly offset by the positive DI inflow to Hong Kong during the year.

     As for the total stock of Hong Kong's outward DI (i.e. the position of Hong Kong's DI assets), it increased by 4.6% over 2019 to $16,420.3 billion. Its ratio to GDP was 611% in 2020. The increase in 2020 was mainly attributable to the positive outflow of DI to enterprises outside Hong Kong during the year.

     Analysed by immediate source of investment, the British Virgin Islands (BVI) and the mainland of China (the Mainland) were the two largest sources for Hong Kong's inward DI, with a share of 31.6% and 27.1% respectively at end-2020. Analysed by major economic activity of HKEGs which had received inward DI, those engaged in investment and holding, real estate, professional and business services took up the largest share, at 65.2% at end-2020. This was followed by banking, at 13.2%; and import/export, wholesale and retail trades, at 11.0%.

     Analysed by immediate destination of investment, the Mainland and the BVI were the two largest destinations for Hong Kong's outward DI, with a share of 47.3% and 31.6% respectively at end-2020. Analysed by major economic activity of HKEGs which had made outward DI, those engaged in investment and holding, real estate, professional and business services took up the largest share, at 77.7% at end-2020. This was followed by import/export, wholesale and retail trades, at 8.5%.

Flows of DI

     In 2020, total DI inflow amounted to $911.1 billion, larger than that of $456.7 billion in 2019. On the other hand, total DI outflow in 2020 amounted to $647.4 billion, larger than that of $295.9 billion in 2019. Taking the inflow and outflow together, a net DI inflow of $263.7 billion was recorded in 2020.

     Analysed by immediate source of investment, the Mainland was the major source of Hong Kong's DI inflow in 2020, amounting to $337.2 billion. The BVI came next, at $238.4 billion. Analysed by major economic activity of HKEGs which had received DI inflow, those engaged in investment and holding, real estate, professional and business services attracted the largest amount in 2020, at $690.2 billion.

     Analysed by immediate destination of investment, the Mainland accounted for a predominant share of Hong Kong's DI outflow in 2020, at $380.7 billion. The BVI came next, at $244.0 billion. Analysed by major economic activity of HKEGs which had made DI outflow, those engaged in investment and holding, real estate, professional and business services took up the largest amount, at $618.5 billion.

Commentary

     A Government spokesman said that notwithstanding the severe COVID-19 induced recession in 2020, Hong Kong's total DI inflow and total DI outflow saw sharp increases of 99.5% and 118.8% respectively over 2019, giving a net DI inflow of $263.7 billion in 2020, which was 64.1% larger than in the preceding year. Despite the notable increase in total DI inflow during the year, Hong Kong's stock of inward DI fell slightly by 1.9% in 2020, primarily caused by the drop in share prices of some prominent enterprises amid the COVID-19 pandemic.

     The stocks of overall inward and outward DI were substantial at end-2020, at $15,883.5 billion and $16,420.3 billion (591% and 611% of GDP) respectively, making Hong Kong one of the world's major destinations for and sources of external DI. The vast stock of external DI in Hong Kong testifies our status as a prominent international financial centre and commercial hub, as well as our attractiveness as a base for multinational corporations to manage their investments and businesses around the world.

     The spokesman noted that Hong Kong's DI covers a large geographical spread and a wide range of economic activities, with the Mainland featuring prominently both as a source and as a destination. The National 14th Five-Year Plan establishes a new development pattern featuring "dual circulation" and sets a clear positioning for Hong Kong. By fully leveraging its strengths and unique advantages under "one country, two systems", Hong Kong will proactively integrate into the country's overall development and further enhance our role as an international financial and business centre.

Further Information

     DI represents external investment in which an investor of an economy acquires a lasting interest and a significant degree of influence or an effective voice in the management of an enterprise located in another economy. For statistical purpose, an effective voice is taken as being equivalent to a holding of 10% or more of the voting power in an enterprise.

     According to the international statistical standards, the total stocks and flows of DI presented above are compiled based on the "asset/liability principle", while detailed DI figures analysed by country/territory and by major economic activity of HKEGs are based on the "directional principle". Owing to the adoption of different presentation principles, the total stocks and flows of DI are different from the sums of the detailed DI figures by country/territory or by major economic activity of HKEGs. However, the overall direct investment balance compiled from figures based on these two presentation principles respectively is the same.

     Tables 1 and 2 show the positions (i.e. stocks) and flows of inward DI in Hong Kong by selected major investor country/territory and by major economic activity of HKEGs respectively for 2019 and 2020. Similar statistics on outward DI from Hong Kong are presented in Tables 3 and 4.

     More detailed statistics for 2020 are given in the report External Direct Investment Statistics of Hong Kong 2020. Users can download the publication at the website of the C&SD (www.censtatd.gov.hk/en/EIndexbySubject.html?pcode=B1040003&scode=260).

     Enquiries about the DI statistics may be directed to the Balance of Payments Branch (2) of the C&SD at 3903 7024.

Ends/Friday, December 10, 2021
Issued at HKT 16:30

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