“Safe haven” markets (consisting of the BRICs, US, UK and Germany) will continue to see investment whereas Southern Europe and the Middle East will experience less fanfare from chief financial officers, according to a survey from accountancy and business advisory firm BDO.
The BDO Global Opportunity Index surveyed more than 1,000 chief financial officers from mid-sized companies planning foreign expansion and revealed that businesses have become more cautious. Two-thirds of chief financial officers are planning to ramp up investment in safe haven markets rather than their “riskier” counterparts.
Spain is now perceived as a riskier investment destination than Egypt and likewise Greece is seen as more risky than Libya and Syria
“Our survey shows that the risk-reward dynamic is changing as ambitious CFOs face greater risk for the same reward. CFOs from mid-sized companies are being forced to pursue a ‘better the devil you know’ approach to overseas investment, rather than take bigger risks that could lead to greater returns,” said in a statement BDO chief executive Martin van Roekel.
The findings indicate that the BRICs are now perceived as established markets – rather than emerging – as nearly half of the finance chiefs interviewed now plan to (or have already entered) these markets markets compared to 29 percent in 2011.
Southern Italy, which was traditionally considered a safe investment, is now seen as risky as the politically unstable countries of the Middle East. Spain is perceived as a riskier investment destination than Egypt and likewise Greece is seen as more risky than Libya and Syria.
Other traditionally established markets, including France and Japan, have also fallen down the survey’s rankings with chief financial officers who cited cultural and language issues hampering success in these markets. And a number of respondents said that the change of government in France has created uncertainty making it a less attractive investment destination.