Emerging market countries becoming big investors elsewhere: OECD
Afp, Paris
Companies from emerging market countries such as China and Brazil invested a record 115 billion dollars in cross-border transactions last year, half of which flowed to western industrialised powers, the OECD reported Thursday. "One of the most important trends is the emergence of a number of major international investors domiciled in developing countries," the Organisation for Economic Cooperation and Development said in a report on foreign direct investment. It cited the acquisition of the Anglo-Dutch steel group Corus by Tata Steeel of India to become the world's fifth-biggest steel firm and the purchase of the Canadian mining group Inco by CVRD of Brazil. Elsewhere Orascom of Egypt acquired Wind of Italy and Mexico's Cemex cement producer took over Rinker of Australia. "2006 became the the highest year on record for cross-border merger and acquisitions originating in non-OECD countries, reaching an estimated 115 billion dollars (86 billion euros)" the report said. "More than half of this money flowed into OECD economies." The OECD groups 30 of the world's leading western industrialised nations. The OECD also found that the presence of countries in world rankings of emerging market companies had increased markedly. It said the number of Fortune 500 companies headuqartered outside the North Atlantic area, Japan and Oceania had risen from 26 in 1988 to 61 in 2005, noting that Russian gas giant Gazprom had surpassed Microsoft to become the world's third most valuable company. The OECD attributed the surge in overeas investment by emerging market nations to "rapid economic growth, especially in Asia and oil-exporting countries, high prices for raw materials and continuing investment liberalisation" in certain countries. "The phenomenon is not limited to few takeover deals," the report noted. In another study, US accounting firm Ernst and Young found that global equity markets benefited in the first quarter of 2007 from a surge in the number of stock market flotations by Chinese and Russian firms. "Propelled by mega-deals from China and Russia, global IPO markets soared in 2006 and remain buoyant in 2007," Ernst Young said. Saying that "accelerated globalization" was driving "record-setting" IPO activity, the report observed: "The emerging markets remain the wellspring of the world's most vibrant growth stories, with China fuelling Asian markets, and Russia driving European markets."
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