• 4 hours Squid Game Rampage Fails to Lift Netflix Stock After Stellar Earnings
  • 2 days Did Big Bank Earnings Just Signal ‘Real’ Economic Recovery?
  • 3 days The Cannabis Industry Is Looking To Fill The Employment Gap
  • 6 days Earnings Beat Isn’t Enough for S&P 500 Q3
  • 8 days The New World Tax Order
  • 9 days Is Crypto Finally Ready To Pay The Piper?
  • 10 days Is It Time To Buy The Global Gaming Market Dip?
  • 13 days Even The Mafia Has A Millennial Problem
  • 16 days Zuckerberg Loses Billions in Social Media Outage
  • 16 days ‘Pandora Papers’ Leak Reveals More Financial Crime
  • 17 days US Retail Has A Major Supply Chain Problem
  • 21 days China Has Set Out To Crush Crypto...Again
  • 22 days Top Performing Cannabis Stocks of the Year
  • 22 days Millennials Could Power A 20-Year Bull Stock Market
  • 28 days The Million-Dollar Question: Will China Bail Out Evergrande?
  • 29 days 3 Restaurant Stocks In Full Recovery Mode
  • 29 days Bitcoin Is Driven By Testosterone
  • 34 days Quantum Computing Is The Newest Megatrend In Silicon Valley
  • 35 days How To Invest In The Cybersecurity Boom
  • 37 days Investors Are Patient With Unprofitable Giants
Michael Scott

Michael Scott

Writer, Safehaven.com

Michael Scott majored in International Business at San Francisco State University and University of Economics, Prague. He is now working as a news editor for…

Contact Author

  1. Home
  2. Investing
  3. Other

American Money Is Moving Abroad

Euro

As U.S. investment overseas surged last year by 7.6 percent, with most of it going to Europe, the biggest single chunk went to Switzerland, where the attraction is a Alps vacation from the volatility of the rest of the market.

For 2017, $63 billion in American investment money went to Switzerland, which now enjoys a total of $250 billion in U.S. money, not counting cash deposited in Swiss bank accounts.

(Click to enlarge)

Source: BEA

Oliver Hohermuth, heads the Dallas office of Swiss investment adviser Reyl Overseas, told CNN that Switzerland has been “rediscovered by Americans” as a “good way to diversity, and to be a little bit more segregated from the high volatility that we’ve seen in the US market in the past few years”.

Further, said Hohermuth, the rapid expansion of Swiss industrial companies in emerging markets has proved to be an attractive investment vehicle for wealthy Americans. But perhaps more importantly, the taint of Switzerland has subsided thanks to the 2010 FCPA (Foreign Corrupt Practices Act), which has injected more transparency in the venue and made some Americans more comfortable putting money there.

In other words, it’s not about hiding money today as much as it is about investing.

And Switzerland wasn’t the only European country to see an uptick in U.S. investment money last year.

Overall, the cumulative level of U.S. direct investment abroad increased by $427.3 billion in 2017, topping over $6 trillion, up from around $5.6 trillion the previous year, according to the Bureau of Economic Analysis (BEA). Related: Tesla To Build $5 Billion Plant In China

“The increase mainly reflected a $243.6 billion increase in the position in Europe, primarily in Switzerland, the United Kingdom, Ireland, and the Netherlands. By industry, affiliates in manufacturing and holding companies accounted for the largest increases,” BEA said.

(Click to enlarge)

From the U.S. overseas investment standpoint, it was interesting to note that five countries accounted for more than half the total U.S. investment total at the end of last year, and the Netherlands saw the biggest share, taking in $936.7 billion. Second place went to the UK, with $747.6 billion in U.S. money, followed by Luxembourg with $676.4 billion, Ireland with $446.4 billion and Canada with $391.2 billion.

From the industry perspective of the immediate foreign affiliate, nearly half of those combined totals were in holding companies, according to BEA. At the same time, when looking at the numbers by the industry of the U.S. parent companies, manufacturing accounted for more than half of the total position, followed by finance and insurance, with much smaller shares.

Related: Is There A Correlation Between Gold And The Yuan?

On the flip side, foreign direct investment (FDI) in the U.S. also saw a similar increase, adding $260.4 billion in 2017, hitting over $4 trillion—up from just under $3.8 trillion in 2016. Again, it was Europe that led the push on this, with Ireland, Switzerland and the Netherlands in the top positions, and manufacturing and wholesale trade accounting for the biggest industry increases.

The UK topped the list of ultimate beneficial owners (UBOs) in the U.S., with British UBOs holding a $614.9-billion in the U.S., followed by Canadian UBOs with $523.8 billion, Japanese with $476.9 billion, Germans with $405.6l billion and citizens of Ireland with $328.7 billion.

But what the UBO numbers showed the BEA is that much of the investment from the Netherlands and Luxembourg was ultimately owned by investors in other countries.

By Michael Scott for Safehaven.com

More Top Reads From Safehaven.com

Back to homepage

Leave a comment

Leave a comment