There is significant potential for cross-border investments to India and China as large and medium sized US firms plan to incrementally invest in these Asian economies than in Western Europe, says an UBS report. According to the UBS Evidence Lab USA C-Suite survey within emerging Asia, China is the preferred economy, as 40 per cent of larger companies surveyed expressed a likelihood of incremental investment over the next year, while over a quarter of larger companies expressed an intention to invest in India. The survey of 500 corporate leaders in March-April 2017 included questions on where in the globe their corporates might invest incrementally on average, noted that a greater share of larger and medium sized firms plan to incrementally invest in China and India than in Western Europe.
“…the preferences shown by larger US companies in the UBS Evidence Lab USA C Suite survey for India, combined with the relative economic weight of that economy and the low share of the US FDI stock support the case for currency supporting capital inflows,” it noted. The report further said the US FDI is heavily biased towards Western Europe, and China and India host just 2 per cent of total.
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“This suggests potential for cross-border flows in support of these Asian currencies. We believe the rupee will be supported on the basis of solid FDI flows,” the UBS report said.