Hong Kong has retained its position as Asia's second largest destination for foreign direct investment (FDI), according to a report released on Wednesday by the United Nations Conference on Trade and Development.

The report, named World Investment Report 2007, highlighted Hong Kong as a "front-runner" economy, following high rankings in both its Inward FDI Potential and Performance Indexes.

Hong Kong attracted FDI valued at US$42.9 billion last year, up 28 percent on 2005.

Together with the Chinese mainland, which was the largest FDI recipient, the two economies accounted for over half of FDI inflows into the region last year.

Hong Kong Director-General of Investment Promotion Mike Rowse said here Wednesday the report confirms Hong Kong's position as a highly attractive market for FDI. To be second in Asia and seventh in the world is an impressive feat for a city economy of 7 million people, he added.

"These results confirm Hong Kong's status as an international location in Asia for foreign companies and capital. Equally, the report shows that Hong Kong continues to act as a two-way springboard for overseas companies and capital into the Chinese mainland, and for mainland companies expanding into international markets," Rowse said.

"Beyond the numbers, this investment also brings new skills, products, services and job opportunities that contribute substantially to our economic development and competitiveness," he added.

The FDI inflow into Hong Kong soared more than 30 percent on a year earlier, to US$27.1 billion for the first half of this year.

On a global scale, Hong Kong ranked seventh in FDI inflows last year, up from the eighth place in 2005, with cross-border merger and acquisition activity fueling the rise.

For the third consecutive year, global FDI inflows rose substantially. Total FDI flows reached US$1.306 trillion, up 38 percent from 2005, and approaching the peak of US$1.411 trillion reached in 2000. The rise was driven by increasing corporate profits worldwide and buoyant stock markets which raised the value of cross-border mergers and acquisitions.

The report predicted that FDI flows would continue to rise this year, although at a slower pace. Mergers and acquisitions would drive cross-border investment, with such activities in the first half of this year already valued at US$581 billion, up 54 percent on last year.

(Xinhua News Agency October 18, 2007)