Round-tripping key to why so little foreign investment stays in HK Yesterday was InvestHK's big day when it treats itself to the thrill of announcing the United Nations' annual figures for foreign direct investment (FDI). These statistics were compiled by the UN Conference on Trade and Development ( (Unctad) in its World Investment Report 2012. The reason InvestHK is so keen on reiterating these figures is that it maintains the fantasy that it is doing a wonderful job attracting FDI to Hong Kong. If we are to believe the figures, US$83.2 billion ($HK648.6 billion) in FDI flooded into Hong Kong last year, making it the world's fourth-largest recipient of FDI. But as anyone with a sense of perspective will tell you, there is no way that HK$648.6 billion was invested in Hong Kong last year. As we have said before, it is ridiculous to pretend investment of this order has been made in Hong Kong. Economists believe that most of it is a result of round-tripping. That is to say money that comes out of the mainland through Hong Kong and back into the mainland. InvestHK admitted in a letter to the South China Morning Post last year, 'It has long been acknowledged that there is a round-tripping component to these fund flows.' This understates the situation. Round-tripping is the only way to make sense of Unctad's figures, which show that FDI in Hong Kong last year amounted to 156.2 per cent of gross fixed asset investment. Last year, Wong Tak-jun, dean of the faculty of business administration at Chinese University, said: 'The way we calculate these funds is that they really have to be invested here ... The money stays in Hong Kong.' His views appear to have undergone a reappraisal since then, as this year he was talking about Hong Kong 'serving as a platform' for companies seeking to invest in the mainland, and for mainland companies looking to invest overseas. However there was no mention of the amount of funds that actually stayed in Hong Kong compared with this 'platform' function. It's worth mentioning in this context that last year Hong Kong was ranked fourth on the 2011 Financial Secrecy Index published by the Britain-based campaign group Tax Justice Network. The report noted that Hong Kong has for years served as a 'major round-tripping turntable for China (and for other countries)', whereby funds come out of the mainland and return masquerading as foreign investment. Some cynics might call that money laundering. As these funds pass through Hong Kong, some financial 'institution' takes a fee, so nobody complains. The latest Hong Kong government figures for sources of FDI show that in 2010, 36.9 per cent came from the mainland and 32.5 per cent from that well-known bastion of transparency, the British Virgin Islands. A methodological oddity The Economist Intelligence Unit has adjusted its methodology for determining the world's most 'liveable' city. As a result, Hong Kong has been catapulted from 10th position to first, ahead of Amsterdam, Osaka, Paris and Sydney. The Economist notes this has resulted in 'a few oddities'. It cites Hong Kong, noting that 'a generation of schoolchildren are condemned to carrying asthma inhalers because their little lungs are speckled with contaminants blowing across the harbour from mainland China'. They might have added 'and from Hong Kong's roadside pollution'. Trebles all round Diageo, owner of intoxicants such as Guinness, Smirnoff Vodka, Johnnie Walker, Crown Royal whiskies, and Baileys, among others, is considering a Hong Kong listing. One of the world's largest drinks companies, Diageo is already listed on the London and New York stock exchanges. But it is expanding in Asia and, according to the Sunday Telegraph, is likely to pursue a Hong Kong listing when it needs to raise funds for a major acquisition. The firm is looking to raise 50 per cent of its revenues from emerging markets by 2015. It recently appointed Ho Kwon Ping to its board of directors. Ho is executive chairman and founder of the luxury resort and hotel group Banyan Tree. Welcome Torres Ting People may take a dim view of the way Spain has handled its banking crisis. But the way the country's football team won Euro 2012 made everyone feel good and has possibly offset its banks' inability to replicate its football team's clinical efficiency. But you know a country is considered cool when Hongkongers start naming their babies after its football stars. So welcome to the world Torres Ting, son of singer Miriam Yeung Chin-wah and her husband, Real Ting Chi-ko.