Asia registers record global business investment in 2014
A record £4 trillion was invested in business across the world in 2014, with much of it targeted at firms in Asia.
The total value of finance provided to businesses around the globe hit a record level in 2014, according to a report from Allen & Overy. Furthermore, there was a surge noted in investors lending to Asian businesses.
"Investors have been reacting to the new landscape – searching further afield for yield," the report said.
Using data from Thomson Reuters, the international law firm calculated that investment rose to four trillion pounds, a level never before seen. Lending in Europe remains below the pre-financial crisis peak but the growing trend of lending to Asian firms helped lift the total to record highs.
Lending to Asian businesses went up from £360 billion to £571 billion between 2007 and 2014, driven higher as borrowing costs dropped due to monetary policy easing measures that flooded the world with cheap money in the wake of the financial crisis.
Furthermore, while corporate lending made up more than two thirds of the record total global investment, the report illustrates that businesses are increasingly turning to alternative funding for the loans.
Alternative funding now accounts for more than four tenths of the total funding among European corporates, nearly double the amount than the year before. While bank lending remains the biggest source of funding for businesses in Europe, the research forecasts that alternative finance will continue to account for a larger proportion in 2015.
“Corporates have more options than ever before, and there is no ‘one-size fits all’ approach. We expect markets to continue evolving, adding new dimensions to corporates’ decision making matrix,” said Angela Clist, co-head of Financial Institutions Group at Allen & Overy.
“As competition continues to increase not only in the type of products corporates choose, but locations where they source funding and the players who ultimately provide it, banks have an increasingly pivotal role to play in facilitating access to this broader and more global market,” she added.