In these two countries , net portfolio investment inflows were driven by higher net debt inflows in some cases partly related to yield differentials although net equity inflows also played a role .

This was mainly the result of increased net inflows in equity portfolio investment , which were offset by net outflows in direct investment and lower net inflows in debt instruments ( see Chart 34 ) .

NET INFLOWS IN COMBINED DIRECT AND PORTFOLIO INVESTMENT IN 2004 In the financial account , combined direct and portfolio investment experienced net inflows of Euros 18.3 billion in 2004 , compared with net inflows of Euros 38.3 billion in 2003 .

Such net portfolio outflows are almost totally offset by other investment inflows .

Net inflows of foreign direct investment have covered slightly less than half of this deficit .

NET INFLOWS IN COMBINED DIRECT AND PORTFOLIO INVESTMENT DECREASED IN 2007 In the financial account , the euro area experienced net inflows of Euros 124 billion in combined direct and portfolio investment in Source ECB .

NET INFLOWS IN COMBINED DIRECT AND PORTFOLIO INVESTMENT INCREASED IN 2009 In the financial account , the euro area experienced net inflows of Euros 251.2 billion in combined direct and portfolio investment in 2009 , compared with net inflows of Euros 161.5 billion a year earlier .

This development reflected mainly higher net debt inflows which , in some cases , could have been partly related to yield differentials but net equity inflows also gained in importance .

In these two countries , net portfolio investment inflows resulted from substantial net debt inflows related , in the case of Hungary , to yield differentials , whereas net equity flows were negative .

Slovenia has recorded only modest net FDI inflows over the past ten years .

Overall , the analysis of the sectoral composition and of bilateral flows reveals that the M A boom of the late 1990s and in recent years was mainly driven by acquisitions of technology and telecommunications firms by both European and US companies .

In addition to the general eligibility criteria , counterparties must also fulfil all operational criteria specified in the contractual or regulatory arrangements applied by the euro area NCBs to ensure the efficient conduct of monetary policy operations .

NET INFLOWS IN COMBINED DIRECT AND PORTFOLIO INVESTMENT IN 2006 In the financial account , the euro area experienced net inflows of Euros 109.2 billion in combined direct and portfolio investment in 2006 , compared with net outflows of Euros 45.4 billion in 2005 .

The rise in net inflows in portfolio investment emanated from an increase in net purchases of euro area equity securities by non residents .

After a sharp increase in the early part of the year , net inflows in debt instruments subsequently subsided .

partly offset by lower net inflows in debt instruments ( of Euros 88.8 billion

In 2005 the portfolio investment balance showed a net outflow following an extended period of net inflows .

Data from the balance of payments suggest that this development reflected net inflows of combined direct and portfolio investment and , in particular , equity inflows into the euro area .

In comparison with 2006 , net direct investment in 2007 decreased substantially in Denmark , Sweden and the United Kingdom .

This increase reflected a shift from net outflows to net inflows in equity portfolio investment ( a change of Euros 80.5 billion ) and a decrease in net outflows in foreign direct investment ( of Euros 98.1 billion ) . These developments were

In the second half of the year , however , net investor inflows to the hedge fund sector were adversely affected by the credit market turmoil and widespread losses in August which had an impact on all

Over the past ten years , net inflows of foreign direct investment ( FDI ) have covered slightly less than half of these deficits .

This was mainly the result of substantially lower net outflows in direct investment and larger net inflows in portfolio investment in both equity securities and debt instruments ( see Chart 35 ) . Excluding the effects of a single large transaction associated with the restructuring of a large euro area firm in 2005 , the rising deficit in direct investment in 2006 was due to an increase in direct investment abroad by euro

renewed interest in euro area equity securities among foreign investors .

At the same time , net inflows in bonds and notes also declined somewhat in 2003 compared with a year earlier .

Press conference following the external Governing Council meeting in Maastricht on 7 February 2002 to mark the tenth anniversary of the signing of the Maastricht Treaty . President Duisenberg announces that he will step down in 2003

In comparison with 2005 , net FDI inflows in 2006 rose in most of the non euro area EU Member States .

More specifically , after recording net inflows of Euros 52.8 billion in 2002 , net investment in debt instruments turned negative in 2003 showing net outflows of Euros 27.4 billion ( see Chart 26 ) .

They forward the data input to one of the outputs depending on the values of the selection inputs.

NET OUTFLOWS IN COMBINED DIRECT AND PORTFOLIO INVESTMENT IN 2003 In the financial account , combined direct and portfolio investment experienced net outflows of Euros 9.3 billion in 2003 , compared with net inflows of Euros 61.9 billion in 2002 ( see Chart 26 ) .

Turning to direct investment , the lower net outflows in 2007 primarily reflected higher foreign direct investment inflows into the euro area .

Following net outflows from the hedge fund industry during the final quarter of 2005 , aggregate net inflows recovered in the first half of 2006 , rising to levels close to the peak observed during 2004 .

Net inflows were very strong in the first half of the year , notwithstanding a shortlived episode of financial market turbulence in late February and early March .

NET OUTFLOWS IN COMBINED DIRECT AND PORTFOLIO INVESTMENT IN 2005 In the financial account , the euro area experienced net outflows of Euros 13 billion in combined direct and portfolio investment in 2005 , compared with net inflows of Euros 24 billion in 2004 .

The real effective exchange rates of the euro , which are adjusted for the price and labour cost differentials between the euro area and its partner countries , have tracked the nominal index fairly closely ( see Chart 23 ) .

were rather sizeable in the case of Sweden , whereas net FDI inflows to the United Kingdom were strongly positive .

A slowdown in the pace of the decline in net external assets was visible in the second part of the year , in tandem with a recovery of net inflows from some financial transactions between non MFI residents and the rest of the world sector .

Note Last observation refers to December 2007 except for extra euro area ( November ) and the United Kingdom ( October ) . 80

This development largely reflected lower net inflows in portfolio investment ( by Euros 91.6 billion ) , which were only partly counterbalanced by declining net outflows in direct investment ( by Euros 20.3 billion ) over the same period .

The global hedge fund industry continued to grow in 2007 as a whole , although developments in net inflows varied significantly throughout the year .

This significant improvement in the net external asset position of euro area MFIs reflected both a substantial improvement in the euro area current account balance and net inflows to the euro area of combined direct and portfolio investment .

This reflected primarily a sizeable switch in money market instruments from net inflows to net outflows , as foreign investors seem to have begun re allocating their international portfolio in favour of riskier assets , particularly in the second half of 2003 .

In addition , net private capital inflows slowed down partly reflecting increasing economic uncertainty and the impact of external developments contributing to a further dampening of economic activity .

Overall , net foreign direct investment inflows constituted an important source of financing in recent years for a number of the non euro area Member States , although in most cases these inflows were not sufficient to cover the current account deficit .

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