The clock is ticking down to trade wars between the USA and China, the USA and the European Union, and the USA and both Mexico and Canada. We just wrote about which offshore investments are risky. But, what are today’s foreign investment opportunities? We wrote about foreign direct investment as a guide to where opportunities lie within and outside of the USA. That was in 2014. The same year we noted that offshore investment timing is important as well. That would certainly seem to be the case today with the risk of a global recession due to a trade war and then a possible reordering of trade relationships across the globe. But, what are today’s foreign investment opportunities and are some of them right under our collective noses?
Direct Foreign Investment in Canada Is Up
The Canadians for Tax Fairness website reports that direct foreign investment in Canada is up, while direct foreign investment in the USA is down. They look at this in regard to the Trump tax cuts which have not been sufficient to bring foreign capital into the USA.
“There was speculation that this would result in a flow of money from Canada to the US and anecdotes of businesses relocating have been popping up in the news,” says Diana Gibson, a researcher with Canadians for Tax Fairness, “however, recent Statistics Canada data shows that the outflow has not happened.”
According to Statistics Canada data, Canadian direct investment in the US in the first quarter of 2018 was less than half of the long-term average at $4.1 billion, while direct investment from the US to Canada was higher than the long-term average, at $7.9 billion. Not only were flows into Canada higher than average, and flows to the US lower than average, but net investment actually flowed north.
The tax fairness folks use this data to argue that Canada does not need lower corporate taxes. Our take on the situation is that the USA is on the way to walling itself off from the rest of the world. And even investors in the USA are smart enough to see that today’s foreign investment opportunities are in places like Canada.
The folks who produce yearly foreign direct investment statistics are the OECD. They note that foreign direct investment is generally down across the globe.
Global FDI flows reached their lowest level since 2013 (USD 280 billion) in the fourth quarter of 2017. Inflows to the OECD area decreased by 37%, largely driven by decreases in the United Kingdom and the United States from high levels in 2016. Outflows from the OECD area decreased by a more modest 4%.
US News lists the countries that receive the most foreign direct investment and we believe are today’s foreign investment opportunities. The USA stills ranks number one but the figures were gathered before a trade war loomed. Next on the list are the UK, China, the Netherlands, Ireland, Brazil, and Singapore. Rounding out the list are Germany, India, and France.
If you are looking for investment opportunities outside of the USA, take a look at our article on risky offshore investments and then take a look at the US News article for ideas about better nations into which you might put your money offshore.
What Are Today’s Foreign Investment Opportunities? PPT