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Nov 27, 2013

India overtakes China as most attractive investor destination

Depreciation in the rupee and opening up of new sectors to foreign investment boosts Indian allure

India has overtaken China as the country companies are most likely to invest in, reveals research from Ernst & Young (EY).

Brazil has now moved into second place, with China slipping into the third spot, according to EY’s ninth biannual Capital Confidence Barometer. China is followed by Canada, with the US in fifth place, according to the survey of 1,600 senior executives from more than 70 countries.

In EY’s eighth Capital Confidence Barometer, published in May this year, China was the most popular investment destination, followed by India and Brazil.

The research also reveals where investment cash is coming from. The top investors in India hail from the US, France and Japan, while those in the US, Australia and Singapore favor China. In Brazil, the top investors are US, the UK and France.

‘The investor outlook for India remains positive, despite the challenges the country’s economy has faced in the recent past,’ says Amit Khandelwal, national leader and partner in EY’s transaction advisory services.

‘At the same time, the improved condition of the world economy has helped increase confidence among deal makers, prompting them to take a bolder stance toward executing transactions. The Fed’s reassurance on not pulling back stimulus in the near term has [also] boosted confidence in boardrooms.’

China has opened up foreign direct investment possibilities across a number of industries over the past year, including telecoms and oil & gas, while macroeconomic pressures have further increased investment potential in the south Asian country.

EY’s study also looks at global executive confidence, reporting a more upbeat approach to deals, alongside stronger outlook for the global economy, with 35 percent of surveyed executives now planning acquisitions – a 10 percentage-point increase from a year ago.

‘M&A sentiments are being buoyed by a much more positive view of deal fundamentals,’ says Pip McCrostie, global vice chair of EY’s transaction advisory services. ‘There have been notable increases in the number and quality of acquisition opportunities, as well as a significant improvement in the likelihood of successfully closing deals.’

Garnet Roach

An award-winning journalist, Garnet Roach joined IR Magazine in October 2012, working on both the editorial and research sides of the publication. Prior to entering the world of investor relations, her freelance career covered a broad range of...