ANALYSIS AND COMMENTS

INTERNATIONAL INVESTMENT POSITION

Australia’s net international investment position at 31 December 2009 was $767.3 billion, an increase of $62.2 billion on the previous year.

Level of foreign investment in Australia

The level of foreign investment in Australia increased by $136.1 billion to reach $1,897.7 billion at 31 December 2009. Portfolio investment accounted for $1097.8 billion (58%), direct investment for $436.1 billion (23%), other investment liabilities for $284.8 billion (15%) and financial derivatives for $78.9 billion (4%). Of the portfolio investment liabilities, debt securities accounted for $728.9 billion (38%) and equity securities for $369.0 billion (19%).

The leading investor countries at 31 December 2009 were:

• United States of America ($514.3 billion or 27%);
• United Kingdom ($498.6 billion or 26%);
• Japan ($102.0 billion or 5%);
• Netherlands ($43.4 billion or 2%);
• Hong Kong (SAR of China) ($43.2 billion or 2%);
• Singapore ($40.2 billion or 2%).

In addition, the level of borrowing raised on international capital markets (e.g. Eurobonds) was $93.1 billion or 5%.

The following graph illustrates the percentage share, by leading countries, of the total level of foreign investment in Australia at 31 December 2009.


Level of Australian investment abroad

The level of Australian investment abroad reached $1,130.4 billion at 31 December 2009, an increase of $73.9 billion on the previous year. Portfolio investment abroad accounted for $430.1 billion (38%), direct investment for $344.6 billion (30%), other investment for $220.2 billion (19%), reserve assets for $45.3 billion (4%) and financial derivatives for $90.2 billion (8%). Equity has been the main form of Australian investment abroad during the past decade. At $584.5 billion, equity represented 52% of the total level of investment at 31 December 2009.

The leading destination countries as at 31 December 2009 were:

• United States of America ($403.7 billion or 36%);
• United Kingdom ($178.7 billion or 16%);
• New Zealand ($79.8 billion or 7%);
• Germany ($37.7 billion or 3%);
• Canada ($36.8 billion or 3%);
• Japan ($31.6 billion or 3%).

The following graph illustrates the percentage share, by leading countries, of the total level of Australian investment abroad at 31 December 2009.



FINANCIAL ACCOUNT TRANSACTIONS

The balance on financial account for the year ended 31 December 2009 recorded a net inflow (surplus) of $55.4 billion. This result is up $0.5 billion on the net inflow of $54.9 billion recorded for the previous year.

Foreign investment in Australia - Transactions

Foreign investment in Australia recorded a net inflow of $159.5 billion for the year ended 31 December 2009, an increase of $12.0 billion on the net inflow of $147.5 billion for the previous year.

The leading investor countries were:

• United State of America ($93.8 billion or 59%);
• United Kingdom ($33.9 billion or 21%);
• Netherlands ($12.9 billion or 8%);
• Japan ($11.4 billion or 7%);
• China ($7.8 billion or 5%);
• Canada ($3.3 billion or 2%).

The following graph illustrates the percentage share, by leading countries, of total financial transactions for foreign investment in Australia during the year ended 31 December 2009.


Australian investment abroad - Transactions

Australian investment abroad recorded a net outflow of $104.1 billion for the year ended 31 December 2009, an increase of $11.5 billion on the net outflow of $92.6 billion for the previous year.

The leading destination countries were:

• United States of America ($74.5 billion or 72%);
• Germany ($13.3 billion or 13%);
• New Zealand ($5.5 billion or 5%);
• Canada ($3.7 billion or 4%);
• Belgium ($3.6 billion or 3%);
• Luxembourg ($3.6 billion or 3%).

The following graph illustrates the percentage share, by leading countries, of total financial transactions for Australian investment abroad during the year ended 31 December 2009.



INCOME

Income debits totalled $80.1 billion for the year ended 31 December 2009. This result is down $9.0 billion on the income debits in the previous year. The main countries to which income accrued for the year ended 31 December 2009 were:

• United States of America ($15.7 billion or 20%);
• United Kingdom ($13.6 billion or 17%);
• Japan ($7.8 billion or 10%);
• Netherlands ($3.2 billion or 4%);
• Switzerland ($2.0 billion or 3%);
• Germany ($2.0 billion or 2%).

Income credits totalled $33.6 billion for the year ended 31 December 2009. This result is down $10.8 billion on the income credits in the previous year. The main countries from which income accrued for the year ended 31 December 2009 were:

• United States of America ($9.7 billion or 29%);
• United Kingdom ($3.8 billion or 11%);
• Canada ($1.9 billion or 6%);
• New Zealand ($1.4 billion or 4%);
• Germany ($1.2 billion or 4%);
• Netherlands ($1.2 billion or 4%).