Signal Portfolio and bank-related flows, not FDI, drove the decade's variation in inflows

Summary

This signal identifies what has driven the ups and downs of capital reaching the six Southeast Asian growth markets. Across the past decade, the report finds that most of the year-to-year movement came from portfolio flows and bank-related and other inflows. Foreign direct investment, by contrast, stayed comparatively steady and remained the largest component. Portfolio inflows alone ranged from a negative figure in 2022 to a large positive one in 2019. The implication is that the volatility investors and policymakers observe in total inflows is largely a story about short-term and banking money rather than direct investment.