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Foreign portfolio investment (Foreign Portfolio Investment)
Define
Foreign indirect investment in english is Foreign Portfolio Investmentabbreviation: FPI. It is the purchase of foreign financial assets for the purpose of making a profit, the owner of the capital does not directly manage and manage the process of using capital.
Related terms
International investment (Foreign Investment) is a form of international economic relations in which capital is moved from one country to another in order to invest and bring benefits to the parties involved.
Forms of foreign indirect investment
Includes: purchase of shares, shares, bonds and other valuable papers in a country in accordance with securities laws and other relevant laws.
Characteristics
– During the use of investment capital, ownership and right to use capital are separated between the two entities. Ownership of capital belongs to the investor, the right to use capital belongs to the investee.
– Investors can make foreign indirect investment by: buying shares or bonds of foreign economic organizations on the stock market of that country; buy foreign government bonds; buy investment certificates of investment funds.
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Meaning
Impact of foreign indirect investment on the investor
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Favorable |
Difficult |
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Relatively stable profit It is possible to limit risks when dispersing investment capital in many different projects |
Investors do not have to operate capital-using activities, so the benefits are often low. |
Impact of foreign indirect investment on the investee
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Favorable |
Difficult |
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The investee is active in the process of using investment capital. If the investee is the government mobilized through international bonds, it usually uses investment capital for large investment projects. If the investee is an enterprise, it will help meet capital for production and business development, and at the same time disperse the risks of investment activities through stocks, bonds, and investment certificates. |
If it is a private source of capital, the ability to attract capital is limited because foreign investors are limited to the maximum capital contribution. Limited ability to absorb modern technology and advanced management experience It is possible to be dependent on capital of foreign investors when they suddenly change their investment activities, adversely affecting the domestic capital market. See more: Sunshine City Apartment District 7, Buying and Selling Sunshine City Saigon Apartment Investment efficiency completely depends on the management level, business organization of the investee. If the management of the investee is poor, it can increase the debt burden for the future. Source: internet |
