Global investment returns to pre-pandemic level in September

Global investment returns to pre-pandemic level in September

Global foreign direct investment (FDI) announcements reached their highest level for more than a year in September, as companies serving growing demand for connectivity and technology outlined major expansion plans, while oil and gas investment also made a comeback as energy shortages reveal the need of new capital expenditure (capex) across the energy matrix. 

The fDi Index, which tracks foreign investors’ sentiment, stood at 939 points in September, up by 27.9% from a year earlier, according to the latest figures from fDi Markets. This is the highest index score recorded since November 2019.

Foreign investors announced 1163 greenfield FDI projects globally in September, more than a fifth of which were in the software and IT services sector. 

Despite this growth, capex is still significantly lower than before the pandemic. 

In the first three quarters of 2021, FDI projects worth over $400bn have been announced, which is 36.9% lower than the same period of 2019, according to the latest fDi Markets estimates.

Chip expansions

Manufacturers continued to be active in September, pledging around $15bn of capital to foreign investment projects, buoyed in particular by buildouts in the semiconductor sector.

Netherlands-based ASM International, which specialises in semiconductor wafer processing equipment, announced significant expansions in its productive capacity as demand for chips continues to rise. 

“In view of the strong growth opportunities ahead of us, we will further step up our R&D investments and strengthen our capabilities,” Benjamin Loh, the CEO of ASM International, said at the company’s investor day in September.

The company outlined plans to expand its facilities in Singapore, South Korea and Finland, as well as ramp up its US production capabilities.

Beyond foreign investment, China’s SMIC, a contract chipmaker, announced it will invest $8.8bn into a new chip plant located at the Lin-gang Free Trade Zone in Shanghai, China. The plant’s capacity is planned to reach 100,000 wafers per month as SMIC’s aims to meet demand for older-generation chips that are currently in short supply.

Data centres

Digital infrastructure providers continued their expansion plans in September, announcing FDI projects worth more than $10.4bn globally — a more than six-fold increase from the same month of 2020. 

In New Zealand, Amazon has announced plans to invest N$7.5bn ($5.19bn) into a series of data centres to serve the domestic market and will create 1000 new jobs by 2036. 

Meanwhile the 2Africa consortium, which includes Facebook and telecom providers, such as China Mobile Internet and Orange, has announced it will extend its African cable system to the Arabian Gulf, India and Pakistan. The extension will bring the total length of the 2Africa subsea cable network to more than 45,000km. 

Oil capacity expansion

As energy markets continue to reel from rising oil and gas prices, fossil-fuel companies announced projects worth more than $7bn in September, compared with roughly $4.4bn of capital pledged to renewables.

This is the first month of 2021 where more investment poured into fossil fuels than renewable energy, thanks in large part to capital-intensive projects.

US-based Exxon Mobil notably announced plans to invest $5bn to increase oil production on Sakhalin Island, Russia by 2036. In a joint venture with partners that include Japan-based Sodeco and Russia’s energy giant Rosneft, the project will serve the Asia-Pacific region.

Europe bounces back

Europe saw FDI projects worth more than $23bn announced, marking the highest jump in pledged capital of any world region in September, compared with the same month of 2020, according to fDi Markets figures. 

Meanwhile, US-based investors announced more projects abroad in September than at home, the first month this has happened in 2021. They announced 278 FDI projects in foreign markets in September, compared with 259 interstate projects — or domestic investments made by a company based in another US state.