Hong Kong direct investment stocks rise in 2023

Inward and outward DI rose by 6.2% and 3.8%, respectively.

The Census and Statistics Department (C&SD) announced that Hong Kong's inward direct investment (DI) stock rose 6.2% to $18.38t at the end of 2023, representing 616% of the city's gross domestic product (GDP). The increase was primarily attributed to positive DI inflows.

Meanwhile, outward DI stock grew 3.8% to $17.70t, or 594% of GDP, driven by outflows to overseas enterprises. However, this was partially offset by a decline in the market value of non-resident enterprises that received investments from Hong Kong.

China and the British Virgin Islands remained the top sources of inward DI, contributing 31.1% and 30.5% of total investments, respectively. Companies in investment and holding, real estate, professional and business services accounted for 67.1% of the inward DI, followed by banking (11.6%) and import/export, wholesale, and retail trades (10.8%).

For outward DI, China and the British Virgin Islands were also the leading destinations, with shares of 49.8% and 28.9%, respectively. Investment and holding, real estate, professional and business services constituted 78.6% of outward DI, whilst import/export, wholesale, and retail trades accounted for 8.4%.

In 2023, Hong Kong recorded $954.9b in DI inflows, slightly down from $958.4b in 2022. Outflows decreased to $752.9b from $931.3b, resulting in a net inflow of $202b.

China was the largest source of DI inflows, contributing $385.8b, followed by the British Virgin Islands at $305.2b. The largest amount of inflows, $564.9b, went to enterprises engaged in investment and holding, real estate, and professional services.

Outflows were primarily directed to China, which accounted for $402.9b, and the British Virgin Islands, which received $116.4b. Companies in investment and holding, real estate, and professional services dominated outflows at $470.8b.

A government spokesperson highlighted Hong Kong's resilience in maintaining significant DI flows despite global geopolitical tensions and financial challenges. The large stock of external DI underscores Hong Kong's role as an international financial and commercial hub.

The government has intensified efforts to attract strategic enterprises to set up or expand operations in Hong Kong. By November 2024, over 60 strategic enterprises had established or expanded operations in the city. A new bill aimed at facilitating the re-domiciliation of companies to Hong Kong will soon be submitted to the Legislative Council.