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. Last Updated: 07/27/2016

Investors Go For Europe Over Emerging Markets




LONDON -- Developing nations are losing out to Europe as a destination for business investments as the introduction of the euro and memories of emerging markets crises persuade companies to put their money into more industrial countries, a survey showed.


Europe is now the second most preferred region for foreign direct investment after the United States, pushing Latin America into third place, according to 155 companies questioned by consulting firm A.T. Kearney.


"Investors clearly have been chastened by the turbulent conditions in emerging markets in recent years and today are more likely to invest in markets such as Europe and Japan," Kearney vice president Paul Laudicina said Monday.


"Nonetheless, there is evidence that global corporations will continue to invest selectively in emerging markets, attracted by market potential, lower production costs and better valued assets," he said in a statement.


Political uncertainties in Latin America, trade tensions within the Mercosur bloc and disappointing economic performance in most countries could all have contributed to a deterioration of sentiment toward the region, the survey said.


But the outlook for Latin America is improving, and companies were slightly more optimistic about the region than they were six months ago.


The swing to Europe meant Britain pushed China into third place as the most favored nation for foreign investment, with strong economic growth and the pro-business stance of Prime Minister Tony Blair putting Britain second only to the United States.


China's possible World Trade Organization membership was not an important investment factor for the companies surveyed. Two out of three companies already invested in China said they were not meeting profitability targets.