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Switzerland-based companies withdrew a total of 71 billion francs from their foreign subsidiaries in 2022. This continues the trend of previous years, the Swiss National Bank (SNB) announced on Friday. In 2021, divestitures were slightly higher at 111 billion francs.
As in previous years, companies especially in the service sector transferred the funds back. However, as before, it was not almost exclusively finance and holding companies (CHF 26 billion). Other service sectors also significantly reduced their financial investments abroad.
Chief among these is the transportation and communications sector with 29 billion francs. Disinvestments in banks reached 19 billion francs.
In general, there are only a few sectors that make balanced investments abroad. In terms of services, the insurance and trade sectors came to the fore with 6 and 4 billion dollars, respectively. Direct investments in industry were made in the metal and machinery industry group, with a maximum of 5 billion francs.
Light flow to Asia
Switzerland has traditionally been one of the world’s largest direct investors. Reasons for this include the large number of headquarters of large multinational companies and the attractiveness of Switzerland for foreign-controlled holding companies.
The largest direct investment outflow came from European locations (CHF 42 billion). Typical holdings in Cyprus, Great Britain and Luxembourg were particularly affected. A significant amount of funds worth 34 billion francs was also withdrawn from the offshore centers of Central and South America.
In Asia, there was a small inflow of 8 billion francs. Singapore and South Korea especially benefited from this.
The stock of direct investment abroad decreased from 1.452 billion francs to 1.319. The lion’s share consisted of equity capital. A small portion of it consists of group loans. Finance and holding companies constitute the majority, with a share of nearly 40 percent. Companies in the chemical and plastic industry group are far behind with 15 percent.
Foreign direct investment stock decreased
Investors from abroad also withdrew money from Switzerland. However, the loss of 58 billion francs was much less than in the previous year, when the balance was 133 billion francs.
As in previous years, the withdrawal of funds was attributed primarily to financial and holding companies, which withdrew CHF 70 billion. The SNB believes that companies will thus continue the balance sheet cuts they initiated in 2018.
On the other hand, foreign companies invested more in their subsidiaries in the trade (+11 billion Swiss francs) and chemicals and plastics sectors (+9 billion Swiss francs). SNB states that profits in trade are primarily reinvested and that the increase in the chemicals and plastics sectors is due to takeovers.
The stock of foreign direct investment also decreased significantly, from 1.120 billion francs in 2021 to 1.055 billion francs.
Swiss companies participating in the SNB’s survey said they control approximately 20,300 subsidiaries abroad. They employed almost 2.3 million people; This is approximately 3 percent more than the previous year. Sales rose 8 percent to 887 billion francs.
The companies are also important domestic employers. The number of employees increased slightly to 538,500 in 2022. (SDA)
Source :Blick
I’m Tim David and I work as an author for 24 Instant News, covering the Market section. With a Bachelor’s Degree in Journalism, my mission is to provide accurate, timely and insightful news coverage that helps our readers stay informed about the latest trends in the market. My writing style is focused on making complex economic topics easy to understand for everyone.
