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US investments in Singapore swell in 2015

But investment income is down, along with US returns in the rest of the world
Monday, September 12, 2016 - 05:50

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US direct investments in Singapore surged last year, although the pace of increase eased worldwide, as the latest figures released by the US Department of Commerce show.

Singapore

US direct investments in Singapore surged last year, although the pace of increase eased worldwide, as the latest figures released by the US Department of Commerce show.

Still, the slowdown in the global economy, which puts a speed bump in the way of overall US investment growth, also took a toll on US investment income here, dragging it down with US returns in the rest of the world.

US investment income in Singapore, which jumped to US$28.77 billion in 2014, was lower at US$22.89 billion last year - even lower than 2013's income of US$26.53 billion.

In the whole Asia-Pacific region, US investment returns tumbled from US$77.17 billion in 2014 to US$65.73 billion in 2015. Only in Japan and South Korea, among the major markets, did US corporations post higher profits.

Globally, the returns from US investments slipped to US$402.29 billion last year - down from US$448.43 billion in the previous year. The drop came despite higher US investments overseas.

While US foreign investments were still growing, the growth has been slowing in recent years. The stock of US investments outside the US rose just 4.4 per cent to US$5,040.65 billion in 2015, easing from a 5.5 per cent rise in 2014 to US$4,829.43 billion.

The slowdown was starker when seen against the average annual growth rate of 8.9 per cent in 2005-2014.

In contrast, US direct investments in Singapore have expanded more noticeably. They jumped 39.5 per cent to US$288.67 billion in 2015 cumulatively, on top of a 13.7 per cent rise in 2014 to US$206.96 billion.

Noting that US corporations pumped a total of US$32 billion more into the Asia-Pacific region last year, the Commerce Department said in a report: "The largest increase, which comprised two-thirds of the increase in the area, occurred in Singapore."

The stock of US investments in Singapore more than doubled in the past five years, with the investments swelling from US$119.39 billion in 2011 to US$288.67 billion last year. That amount makes it the biggest US investment in the Asia-Pacific region, exceeding the investments that US corporations sank in bigger economies such as Japan and China.

In global terms, US investments in Singapore accounted for a significant 4.5 per cent of total US investments abroad.

Only in the Netherlands, UK, Luxembourg, Canada, Ireland, Bermuda and the Caribbean were the investments larger.

Nearly half of the capital that US corporations sank in Singapore were in holding companies that likely invested funds in other economies. A big chunk of the investments (US$40 billion) were in the wholesale trade.

The manufacturing sector took another big slice of the stock of investments (US$35.97 billion), of which over half (US$25.64 billion) went to factories making computers and electronic products.

Worldwide, around half of US investments were in holding companies. Manufacturing accounted for the next biggest slice of the investments, followed by finance and insurance (excluding banks), wholesale trade, information, and professional, scientific and technical services.

According to the US Department of Commerce, the largest contributor to last year's investment growth were "financial transactions, mostly reinvestment of earnings in equity investment".

Over half of the total US investments abroad as at end-2015 were in the Netherlands, UK, Luxembourg, Canada and Ireland. The single biggest US investment (US$858.1 billion) was in the Netherlands. Four-fifths of the US investments there were in holding companies.

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