Anti-Schanoes - correction/addition

Jurriaan Bendien bendien at tomaatnet.nl
Wed Sep 17 05:22:26 MDT 2003


I wrote:

Total market capitalisation of equity of all UK companies is estimated at
about 1269 TRILLION pounds in 2002 or about  1900 trillion US$
(http://www.londonstockexchange.com/cmsattach/2215.pdf) and about 80 percent
of that sum is represented by 94 companies.

That should be:

Total market capitalisation of equity of all UK companies is estimated at
about 1.269 trillion pounds in 2002 or about  1.900 trillion US$
(http://www.londonstockexchange.com/cmsattach/2215.pdf) and about 80 percent
of that sum is represented by 94 companies.

I checked the figures again this morning (London Stock Exchange Factsheet
Table 9) because I could not believe the 1269 trillion figure and indeed the
decimal point should be there. It was late at night when I wrote this. The
cited valuation refers to the total equity market value of UK listed
companies at the end of August 2003, arrived at by multiplying the number of
shares by the month-end closing mid-price per share (I don't know whether
they do separate calculations for different types of issues by the same
company). In other words, this is an equity "stock".  UK listed companies
could of course be overvalued or undervalued in the current market overall.

Again, it should be emphasised that the total value of shares of publicly
listed companies does not constitute total domestic investment, since of
course you can "invest" in a lot of other things than publicly listed
companies (private companies, private non-company institutions, bonds,
securities of all types, obligations, real estate, derivatives, insurance,
bank deposits, durables etc.).  Various different data sources need to be
used to get anywhere near the total capital investment.

For the drop in FDI in developed countries, see also Larry Elliott's brief
discussion in The Guardian at
http://www.guardian.co.uk/recession/story/0,7369,981318,00.html Elliot (A
British socialist, not to be confused with Elliot Abrams) refers to the OECD
report at http://www.oecd.org/dataoecd/52/11/2958722.pdf which notes a drop
in the total inflow of FDI into OECD countries in 2002 by over 20 percent
and a drop in the total outflow of FDI from OECD countries in 2002 by about
12 percent. So basically the picture since 2000 is one of overall world
decline in FDI.

The net outflow of FDI (excess of outward FDI over inward FDI) from the OECD
countries rose from US$ 4 billion in 2000 to US$ 76 billion in 2001 to US$
117 billion in 2002. The main recipients are of course the NIC's.

The biggest contributors to declining FDI flows were the USA and the UK.
Because of the loss of confidence by foreign investors in the USA, the USA
has actually become a net exporter of FDI, i.e. outward FDI exceeding inward
FDI by US$ 90 billion. Even so, the outflow of US FDI itself also declined
slightly, by US$ 4 billion, in other words, there is no "dynamic surge" of
US foreign direct investment, as I said before.

For the OECD FDI tables, see http://www.oecd.org/dataoecd/14/3/8264806.xls
which confirm the declining trend also noted by UNCTAD (notice that the OECD
countries themselves account for the vast bulk of world inward and outward
FDI).

Again, this raises the question, if the total FDI declines, then where does
that capital go ? Is it invested in domestic equity ? If it isn't, then
surely it must be placed in some type of securities ?

Jurriaan






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