Focus on Overseas M&As
According to Korea’s direct overseas investment in 2016 released by the Ministry of Strategy and Finance on February 15, Korea posted US$49.24 billion in direct overseas investment (about 56 trillion won) in 2016, up 18.7 percent from a year earlier. The amount of remittances added up to US$ 35.25 billion, a record high, jumping 14.2 percent year on year.
An official of the Ministry of Strategy and Finance interpreted such figures as "the results of the concentration of direct overseas investment aiming at M&As in the 4th quarter of last year." By type, M&A-type direct overseas investments ballooned 94.7 percent to US$233.6 billion (based on reported amounts) while greenfield-type investments to build overseas factories fell 10.8 percent to US$25.48 billion.
By country, Korea’s direct investment in the United States surged. Last year saw a 66.9 percent increase in Korea’s direct investment in the US as Korea invested US$18 billion. In particular, investment skyrocketed to US$9.21 billion in the fourth quarter of last year alone, jumping 182.5 percent year on year. "It is too early to say that the results are attributable to US President Donald Trump’s hardball policies to promote investments in the US as such investments were made before his inauguration," said an official of the ministry. Cayman Islands, an offshore fund base for Korean financial institutions, received investments of US$5.58 billion (an increase of 29.9 percent) from Korea while Korea’s direct investment in Vietnam swelled 2.5 percent to US$2.99 billion. On the other hand, Korea’s direct investment into China declined 8.8 percent to US$4 billion.
By industry, reported investment in real estate and leasing (44.2 percent) and retail (296.9 percent) increased, but reported investment in mining (-27.7 percent) continued to decline. The financial and insurance and manufacturing sectors which accounted for the lion’s share maintained last year’s level.
"It is expected that global direct overseas investment will grow thanks to a recovery of global economic growth, fiscal stimulation by the United States, and a rise in raw material prices this year" said an official of the Ministry of Strategy and Finance.