S. Korea's foreign investment to decline in face of weak global economy

SEOUL, Nov. 17 (Yonhap) -- South Korea's outbound foreign investment is expected
to decline as the financial crisis hits the global economy, the government said
Monday.

The Ministry for Strategy and Finance said that while business investment grew 52
percent annually to $22.8 billion in the first nine months, diminishing rates of
growth around the world and a widespread liquidity crunch will cause companies to
hold onto their money.
The International Monetary Fund forecast global growth to drop to 2.2 percent in
2009 from 3.7 percent this year.
The ministry, however, said that despite an expected dip in overall investment
the percentage of mergers and acquisition (M&A) deals vis-a-vis the total may
reach levels on par with international average of 82 percent.
In 2007, 67 percent of all foreign investments involved South Korean companies
taking over or buying stakes in foreign firms.
M&As are attractive for local firms because they can easily expand market access
in a country by using a recognized brand name or business network.
The latest findings, meanwhile, said that the proportion of outbound investment
in the service and real estate sectors has grown from 4.8 percent and 2.4 percent
respectively in 2003 to 16.7 percent and 14.5 percent as of last year.
Asia continued to attract the bulk of investment or 58.6 percent in 2007 while
that to North America and Europe reached 32.4 percent.
yonngong@yna.co.kr
(END)