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Foreign investors still see US as good place to do business: report

A surge in foreign purchases of US companies and in foreign start-ups in the US last year suggests overseas investors still see the country as a good place to do business despite growing protectionist sentiments here, The Wall Street Journal stated Wednesday.

Foreign investment to start or acquire US businesses jumped by 76.7% to $161.5 billion in 2006 from the previous year, the Commerce Department was quoted as saying Tuesday. It was the highest level since 2000, when outlays totaled $335.6 billion at the height of the dot.com boom. According to the department, Europeans led foreign investors last year, more than doubling their purchases from 2005, to $109.8 billion.

A falling US dollar „makes US assets relatively attractive, especially compared to Europe,” said Brian Bethune, an economist at Global Insight in Lexington, Mass. Additionally, investors chasing high returns helped fuel a boom in global mergers and investment last year.

Middle Eastern investors more than doubled their purchases to $12.4 billion in 2006 from $5 billion during the previous year. The department reported zero investment from China, but said that number could be modified later. Investors largely bought existing US businesses as opposed to starting their own, spending $147.8 billion to do so. More than two-thirds of the foreign purchases were made through US affiliates. The manufacturing sector represented the greatest source of foreign purchases, led by computers, electronics and chemicals. Other major sectors targeted included financial institutions, intellectual property and wholesale, according to the department. (people.com.cn)