Reporting by Joe Cash; Editing
Investment
Western firms shift investment from China to India as worries mount
BEIJING, Sept 13 (Reuters) – U.S. and European firms are shifting investment away from China to other developing markets, a report from Rhodium Group showed, with India receiving the vast majority of this redirected foreign capital, followed by Mexico, Vietnam and Malaysia.
These companies are turning their backs on the world’s second-largest economy even as its share of global growth continues to increase, highlighting how concerns over China’s business environment, economic recovery and politics weigh heavy on the minds of foreign investors.
The value of announced U.S. and European greenfield investment into India shot up by some $65 billion or 400% between 2021 and 2022, Wednesday’s report said, while investment into China dropped to less than $20 billion last year, from a peak of $120 billion in 2018.
“Diversification is well underway,” the research organisation said, but acknowledging: “it will take years for advanced economies to achieve the objectives behind their ‘de-risking’ policies,” as China is so central to global supply chains.
Low production costs and the prospect of a massive middle class drew the first foreign firms to China in the late 1980s, as the country abandoned its Maoist economic model. But with consumers now tightening their purse strings and production costs continuing to rise, the market is losing its sheen.
The shift comes as Chinese local authorities struggle to revive foreign investment after an economically bruising pandemic and property crisis depleted their coffers.
Western companies are stepping up greenfield investment in these markets to give them options when sourcing assembled goods and geopolitically sensitive commodities, such as semiconductors, as well as to reduce their dependence on China in their supply chains, the report said.
But the authors cautioned that diversification is unlikely to result in a rapid decline in exposure to China because the markets foreign firms are investing in are heavily reliant on trade and investment with the Asian giant themselves.
As a result: “it would not be surprising to see China’s overall share of global exports, manufacturing and supply chains continue to rise, even as diversification away from China accelerates.”
Our Standards: The Thomson Reuters Trust Principles.
Economy
S&P/TSX composite down more than 200 points, U.S. stock markets also fall
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD)
The Canadian Press. All rights reserved.
Economy
S&P/TSX composite up more than 150 points, U.S. stock markets also higher
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD)
The Canadian Press. All rights reserved.
Investment
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