EU Positive Net Global Investor in Rest of the World

Data released by Eurostat has revealed that the European Union (EU) holds more stocks globally through Foreign Direct Investment (FDI), compared to what the rest of the world has bought in the EU.

At the end of 2014, the EU held stocks worth EUR5,749 billion in the rest of the world, an increase of 7.6%, from the end of 2013.

In contrast, the amount of stocks that were owned by foreign parties inside of the EU, totalled $4,583 billion , which was a rise of 9.6%, for the same twelve month time period from the end of 2013 to the completion of 2014.

Special Purpose Entities (SPEs) , which are mainly financial holding companies, that are foreign owned, and extensively engaged in cross border financial transactions, were influential for inbound and outbound FDI.

By the end of 2014, the SPEs accounted for half of the FDO stocks that were held by the EU abroad, also amounting to 63% of stocks owned by entities from the rest of the world in the EU.

North America is the EU’s main FDI Partner

North America, and in particular the United States, was the main FDI collaborator for the EU, as 35% of the overseas stocks bought by EU entities were from the United States.

While Canada was the fourth highest FDI partner, with 5% of the total flow of investment from the EU.

Switzerland was the second largest FDI partner, as 11% of EU ventures was placed there.

Out of emerging economies, Brazil was the most influential FDI associate, as 6% of the EU owned FDI assets, were directed to this part of South America.

As for inbound FDI, the United States returned the favour by being the largest investor, holding 40% of the total of stock owned from outside of the EU.

This was ahead of Switzerland who commanded 11% of the total amount of FDI investment into the EU.

Draghi Stands By Inflation Policies

In a speech to the Deutsche Borse Group, one of the largest exchange groups in the world, ECB President Mario Draghi, has defended the European Central Bank’s (ECB) inflation policies.

He reiterated that the role of the ECB will be sticking to the target of roughly 2% for inflation.

He also explained once more why the ECB’s EUR 60 billion a month quantitative easing programme was extended to March 2017.

Draghi said that the ECB was concerned about the external downward pressures on prices, particularly from the reductions in oil prices, which have precipitated downwards from the beginning of November last year, even falling below $30 per barrel.

He said: “With inflation already low for some time, we saw a danger that a continued period of low inflation, even if oil-driven, might destabilise inflation expectations and become persistent.”

“That risk was heightened by the fact that “core” inflation, which strips out energy and food, was also low. Core inflation is not our objective, but it tends to lead headline inflation over the medium-term.”

All of these situations coming together, demanded a monetary policy response, Draghi exclaimed.

Euro Rises Against US Dollar

The euro is currently buying $1.083, after rising to buying just under $1.088 in the early hours of this morning GMT.

Yesterday morning GMT, the euro was buying under $1.08, increased selling pressure may have arisen from the ECB admitting that they will review monetary policy in their next meeting in March, which is likely to result in more stimulus.

The euro has also gained on the UK pound, reaching buying £0.76 this morning GMT , from buying just under £0.758 in the early hours of yesterday.