The market value of Hong Kong's inward direct investment rose 15.2% on 2004 to $4.056 trillion last year, with the ratio to GDP at 293%. Hong Kong's outward direct investment also rose 16.6% to $3.654 trillion, with the ratio to GDP at 264%.

The Census & Statistics Department said both the market value of the stocks of inward and outward direct investment in Hong Kong rose markedly in 2005, in tandem with generally buoyant global economic performance.

Stocks of inward and outward direct investment remained sizable, each amounting to more than 2.5 times the size of Hong Kong's GDP. These underlined Hong Kong's status as a hub for regional headquarters and businesses, as well as an international financial centre.

The Mainland accounted for the largest share of the total stock at the end of last year, at 31.4%, reflecting the importance of investment from the Mainland in Hong Kong.

The British Virgin Islands and Bermuda took up another 31.3% and 6.7% of the total stock of inward direct investment. Other major investor countries included the Netherlands and the US, accounting for 8.1% and 5.1% of the total.

Analysed by economic activity, those engaged in investment holding, real estate and various business services attracted the largest share of 59.4% of the total stock at end-2005. A significant proportion of such investment was related to funds originated from Hong Kong and re-channelled through tax haven economies back to Hong Kong. 

Wholesale, retail and import/export trades also represented a major recipient sector of inward DI, with a share of 13.7% of the total. Banks and deposit-taking companies took up another 12.6%.

On outward direct investment, the British Virgin Islands remained the most popular tax haven economy for indirect channelling of direct investment funds, accounting for 44% of the total stock.

Top destination

The Mainland was the most important destination for Hong Kong's outward direct investment, with a share of 40.4% of the total stock. Guangdong remained a popular location for Hong Kong's Mainland investment, accounting for 37.1% (or $548.1 billion) of the total stock.

The most common economic activity undertaken by Hong Kong's direct investment enterprises on the Mainland were communications, investment holding, real estate and various business services, and manufacturing.

Analysed by economic activity, those engaged in investment holding, real estate and various business services took up the largest share, at 69% of the total stock. This was followed by wholesale, retail and import-export trades (with a share of 10.9%), and manufacturing (4.5%).

Direct investment inflow to Hong Kong fell from $265.1 billion in 2004 to $261.5 billion in 2005. The Mainland was the most important supplier of Hong Kong's direct investment inflow in 2005, amounting to $72.9 billion. The British Virgin Islands came next, at $47 billion.

Analysed by economic activity, those engaged in investment holding, real estate and various business services took up the largest share of the total direct investment inflow in 2005, at $113.9 billion.

Direct investment outflow

Direct investment outflow fell from $356.1 billion in 2004 to $211.5 billion in 2005. This was mainly attributable to substantial negative direct investment outflows in inter-company debt transactions arising from repayment of debts by non-resident affiliates of some Hong Kong enterprises.

The Mainland accounted for a predominant part of Hong Kong's direct investment outflow in 2005, at $130.3 billion. Analysed by economic activity, those engaged in investment holding, real estate and various business services was the most prominent supplier, amounting to $127.2 billion.

Taking direct investment inflow and outflow together, there was a net inflow of $50 billion in 2005.