New data suggests a major decline in foreign investment into the United States. How might that actually be a great thing for both domestic investors and overseas investors still betting on America?
Foreign investment is a frequent complaint by some investors. Especially, when they are driving up asset prices. Both wealthy individuals and international institutions and sovereign funds are often complained about for creating bidding frenzies, overpaying, and being happy to take meager yields. When they come with large amounts of cash they can be seen as preferred buyers to sellers as well.
According to the latest data this could be changing.
Foreign Investment Trends
According to the report published by the UN conference on Trade and Development in January 2021, there have been some sizable shifts in cross border capital flows over the past year.
· A 49% drop in investment into the US to just $134B
· A 4% increase in investment in China to $163B
· An over 50% increase in investing into India to $57B
· An almost 100% reduction of investment into Russia, Italy and the UK
· Around 50% less investment into Brazil and Germany
Putting the Data in Perspective
Overall cross border investment fell by more than 40% in 2020. This was largely due to concerns over COVID-19 and lockdown restrictions.
This means the change in investment into the US was pretty much on par globally.
‘Foreign investment’ covers a wide spread of investment sectors and asset classes. That suggests the direct impact felt in any single industry may be far less impactful than these numbers may indicate on the surface.
The United States has long been the number one beneficiary of international investment, and the most appealing to investors for a variety of reasons. Specifically, lower taxes, a clear legal system, and political stability.
In the long term and taking the global perspective, the attractiveness of the USA for international investment and the huge amount of domestic demand is not likely to dim much.
Take Advantage of the Window of Opportunity
Don’t expect the findings of this report to change the long term outlook for demand and value. However, it could offer a welcomed short term break for investors to grab assets without that competition, and better value pricing on assets.
Don’t let that opportunity slip by you.
Find out more about investing in secured debt and real estate, go to NNG Capital Fund