Chinese FDI jumps in January

BY Richard Summerfield

According to the United Nations economic agency UNCTAD, China overtook the US in 2014 to become the most popular destination for foreign direct investment (FDI). Despite this, for many commentators, last year was disappointing for Chinese inbound FDI, which increased by only 1.7 percent to $119.6bn - the lowest growth since 2012.

As economic growth slows, more and more Chinese firms have begun to look overseas for viable investment opportunities. Accordingly, Chinese outgoing investment appears set to overtake inbound FDI in the coming years.

But there is hope that 2015 may prove more successful in terms of FDI. In January, FDI into China increased by 29.4 percent compared to the same period a year ago, recording its strongest monthly pace in over four years.  China attracted $13.92bn, up from $13.32bn in December 2014. The top 10 investors by region were led by Hong Kong, South Korea, Singapore, Taiwan and Japan, which accounted for 96.5 percent of total FDI into the country.

According to the data supplied by China’s commerce ministry, the services industry was the primary beneficiary of capital inflows. FDI into the services sector climbed to $9.2bn - a 45.1 percent increase from a year earlier and around 66 percent of total FDI. By contrast, manufacturing activity in the country is slowing down.

The commerce ministry, while encouraged by the influx of FDI already recorded in 2015, says it's still too early to suggest that China will remain the leading FDI target this year.

Some analysts have urged caution, noting that January alone may not be the strongest indicator of the likely annual FDI intake. Much of the scepticism is based on the strong seasonal distortions which have been caused by the timing of the Lunar New Year holidays, which began on 31 January 2014 but start on 13 February this year.

News: China January FDI grows at strongest pace in four years

UK hedge fund managers defy Europe slowdown

BY Matt Atkins

The majority of European hedge funds to set up business in recent years have done so in the UK, according to a Preqin's Hedge Fund Analyst factsheet. The UK accounted for 50 percent of European hedge fund launches in the past 12 months.

Europe decelerates

While hedge fund managers in France, Spain and Germany saw a net decrease in assets under management (AUM) between January 2013 and April 2014, UK-based fund managers witnessed an increase of approximately $57bn. “Europe is experiencing a slowdown in terms of new hedge fund managers setting up business in contrast to North America, which has seen an increase in the number of new fund managers coming into market in recent years,” says Amy Bensted, head of Hedge Funds Products at Preqin. “This can be partially attributed to the AIFMD regulation within Europe, which is deterring some prospective new firms setting up a hedge fund business in the region. However, one country within Europe shows no signs of sluggishness – the UK.” Firms with headquarters in the UK now account for $423bn in hedge fund assets – over 10 times the amount of any of its European neighbours.

Prolific 2013

Last year proved particularly prolific for hedge fund manager launches in the UK. Thirty-eight new groups set up business in the country, compared to 17 throughout the rest of Europe. Despite this, the number of hedge fund launches in each region has remained broadly similar, with 91 in the UK, compared to Europe’s 90. But while the UK far outstrips all other European countries in terms of AUM, it is a Sweden headquartered fund manager that has had the most success in fundraising new vehicles: Brummer & Partners’ Canosa fund has amassed over $1bn in assets since its March 2013 launch.

Expected developments

Going forward, the continued growth of UK hedge funds is likely, while continental Europe must do more to attract business, says Ms Bensted. “Over the course of the rest of 2014 it will be interesting to see if UK continues to see increasing volumes of new manager launches and if regulation and other hurdles continue to hinder start-ups in the rest of Europe.”

Press Release: UK Hedge Fund Industry Booms Despite a Wider Slowdown in Europe