Irish investors sticking to the familiar, says report

The majority of Irish foreign investment will continue to be focused on the US and UK markets, a new survey has found.

This is in contrast to the global trend of increased investment towards the BRIC (Brazil, Russia, India and China) economies, according to the KPMG report.

Despite BRIC economies performing well, Ireland’s long-standing strong trading ties with the UK and the US influence investment decisions, with 60% of finance directors expecting to make a significant investment in the UK and 35% expecting to make a similar level of investment in the US over the next year.

The outlook remains similar over the next five years, with 55% expecting to invest in the UK and 35% in the US.

In terms of their overall investment funds, Irish finance directors again expect to invest the majority of their capital in the US and UK - 60% singled out the US and the UK as the countries which will receive most investment.

While the majority of Irish finance directors do not expect to make any major investments in the BRIC economies in the near future, their growing influence is recognised - 45% expect China to be in the top three countries dominant in terms of business activity in their sector.

“Based on this survey Irish investment over the next few years will continue to be predominately into the UK and US markets,” said KPMG partner Donall Gannon.

“Irish investors have a high level of knowledge of these two markets and this is a considerable advantage in making a cross border investment. With the improvements in the German and Polish economies in recent years, these are becoming more attractive to Irish investors.

“It may be a mixture of scale, distance and business culture, but with a few exceptions Irish investment is lagging behind the current international trends of investing into the BRIC countries. It appears timely for Irish businesses to review their future investment strategies and consider these countries as a viable and attractive market.”

From a global perspective, China is expected to overtake the US as the world’s leading recipient of corporate investment in the next five years, and should become the most influential country in IT and telecoms, industrial products and mining.

India is likely to see the largest growth in its share of foreign investment overall, and should become the world leader for investment in manufacturing.

However, the European economies are expected to keep their attraction for investors, with the UK maintaining a very strong position, especially in financial services.

The results showed a move away from investments in the US, Japan, Singapore and the UAE, and a big increase in flows to Brazil, Russia, China and India (BRIC).

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