Capital outflows from Asia have been surging, with Hong Kong and Singapore in the lead, a Lehman Brothers report said yesterday.
The total outflows from the region excluding Japan rose from 4.6 percent of GDP in 1966 to 22.4 percent of GDP in the first half of this year, Lehman Brothers said.
As a proportion of GDP, Hong Kong and Singapore had the largest outflows in the first six months of this year, at 79.1 percent and 76 percent respectively.
Capital inflows to Hong Kong and Singapore as a proportion of GDP were 69.2 percent and 57.6 percent, respectively.
"The build-up of Asian foreign exchange reserves is mostly because of the region's large current account surpluses; net capital inflows have been small," the Business Times quoted Lehman Brothers economist Sonal Varma as saying.
She forecast Asia's capital outflows this year would total US$1.6 trillion, rise to US$2.3 trillion next year and US$3.3 trillion in 2009.
The report noted an increasing trend in intra-regional foreign direct investment. Companies in Taiwan, South Korea, Hong Kong and Singapore have been building plants in lower-income countries, most notably in China.
A new development is the growth in investments from China and India, it said, triggered by the need to secure natural resources, technology and market access.
Between 2005 and last year, outward direct investments from China tripled to US$21.2 billion. The figure for India nearly quadrupled to US$9.7 billion.
Trade credits and loans also represent a large part of the outflows.
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