{
  "title": "Global Portfolio Asset Holdings Decrease Amid Elevated Uncertainty",
  "publication": "IMF Blog, March 20, 2023",
  "sourceUrl": "https://www.imf.org/en/blogs/articles/2023/03/20/global-portfolio-asset-holdings-decrease-amid-elevated-uncertainty",
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  "summary": "Elevated risk aversion amid heightened geopolitical and inflation risks and tightening monetary policies in advanced economies weighed on sentiment",
  "sections": [
    {
      "heading": "Key findings",
      "content": "- Global portfolio investment asset holdings decreased by 15 percent in the first half of last year, the most since 2008.\n- The decrease is attributed to both the reduction in investments and valuation effects.\n- The top 10 portfolio investment holding countries, collectively accounting for about two-thirds of global positions tracked by the CPIS, experienced a sharp decline since the last reporting period six months earlier.\n- The Cayman Islands’ portfolio investment holdings increased by 6.2 percent due to investments in the United States and Japan."
    },
    {
      "heading": "Drivers of the decline",
      "content": "- Elevated risk aversion amid increasing energy prices weighed on capital markets and portfolio investments.\n- Heightened geopolitical risks contributed to reduced cross-border portfolio activity.\n- Rising inflation risks and tightening monetary policies in advanced economies further depressed sentiment and holdings."
    },
    {
      "heading": "Country- and flow-specific observations",
      "content": "- The drop was largely driven by declines in investments by:\n  - the United States (notably in Germany and the Netherlands),\n  - Luxembourg (notably in the United States, Ireland, and Japan),\n  - Ireland (notably in the United States and United Kingdom),\n  - Japan (mainly in the United States).\n- By contrast, the Cayman Islands recorded a 6.2 percent increase in portfolio investment holdings driven by investments in the United States and Japan."
    },
    {
      "heading": "About the Coordinated Portfolio Investment Survey (CPIS)",
      "content": "- The IMF’s CPIS collects data on portfolio investment assets from more than 80 countries.\n- It is the only global bi-annual survey of cross-border portfolio holdings by counterpart economy and by sector of holders and nonresident issuers.\n- The CPIS shows:\n  - which countries invest in a particular country,\n  - how the investments are distributed across institutional sectors,\n  - the currency distribution of such assets.\n- Complete results are available at http://data.imf.org/CPIS."
    },
    {
      "heading": "Risks and macroeconomic implications",
      "content": "- Portfolio investments tend to be volatile and, if not well monitored and managed, can trigger macroeconomic challenges such as:\n  - overheating of the host economy,\n  - loss of export competitiveness due to exchange rate appreciation,\n  - higher vulnerability in the event of a crisis.\n\nEvrim Bese Goksu, Alicia Hierro, Rita Mesias, Wilson Phiri — March 20, 2023\n\n---\n\n\n References\n\n- foreign direct investment\n- Coordinated Portfolio Investment Survey\n\nSource: https://www.imf.org/en/blogs/articles/2023/03/20/global-portfolio-asset-holdings-decrease-amid-elevated-uncertainty"
    }
  ],
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    "Authors: Evrim Bese Goksu, Alicia Hierro, Rita Mesias, Wilson Phiri",
    "Published: March 20, 2023",
    "Global portfolio investment asset holdings decreased by 15 percent in the first half of last year, the most since 2008.",
    "The decrease is attributed to both the reduction in investments and valuation effects.",
    "The top 10 portfolio investment holding countries, collectively accounting for about two-thirds of global positions tracked by the CPIS, experienced a sharp decline since the last reporting period six months earlier.",
    "The Cayman Islands’ portfolio investment holdings increased by 6.2 percent due to investments in the United States and Japan.",
    "Elevated risk aversion amid increasing energy prices weighed on capital markets and portfolio investments.",
    "Heightened geopolitical risks contributed to reduced cross-border portfolio activity.",
    "Rising inflation risks and tightening monetary policies in advanced economies further depressed sentiment and holdings.",
    "The drop was largely driven by declines in investments by:",
    "By contrast, the Cayman Islands recorded a 6.2 percent increase in portfolio investment holdings driven by investments in the United States and Japan.",
    "The IMF’s CPIS collects data on portfolio investment assets from more than 80 countries.",
    "It is the only global bi-annual survey of cross-border portfolio holdings by counterpart economy and by sector of holders and nonresident issuers.",
    "The CPIS shows:",
    "Complete results are available at http://data.imf.org/CPIS.",
    "Portfolio investments tend to be volatile and, if not well monitored and managed, can trigger macroeconomic challenges such as:",
    "[foreign direct investment](https://www.imf.org/en/Blogs/Articles/2022/12/07/united-states-is-worlds-top-destination-for-foreign-direct-investment)",
    "[Coordinated Portfolio Investment Survey](http://data.imf.org/CPIS)"
  ],
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