Tariff tensions, US policy and Brexit are roiling the waters of world trade, shifting global investment flows. Worldwide foreign direct investment (FDI) shrank for a third year running, by 13% year-on-year, bringing total FDI down to $1.3 trillion. This past year’s contraction was largely driven by the repatriation of foreign earnings by US companies in the aftermath of the American Tax Cuts and Jobs Act approval in December 2017, although China’s shrinking outward flows and Brexit uncertainty didn’t help.

According to the United Nations Conference on Trade and Development (UNCTAD), developed countries as a whole pulled in 25% less in FDI. With dark clouds of Brexit looming, investment into Europe fell the most, by 55%, to a 15-year low. Europe’s transition economies (Southeast Europe, the Commonwealth of Independent States and Georgia) saw inbound FDI fall 28%. The Americas suffered more moderate declines, with a drop of 9% in the US and 6% in Latin America and the Caribbean. Yet it wasn’t all doom and gloom: Developing Asia saw FDI rise 3.9%, while Africa’s FDI grew 11%, mostly in the south.

For the past few years, Global Finance has rated countries by how well they attract foreign investors. Ranking FDI attractiveness is no easy feat. We incorporate myriad factors: the quality of natural resources, including the labor force; the potential of the market; the strength and independence of institutions; and government policies and incentives. Further, we consider FDI relative to each country’s economic size, for insight into which smaller countries outperform. Finally, because FDI can fluctuate dramatically from year to year, the Global Finance FDI attractiveness algorithm incorporates a 10-year performance vector as well.

The list of countries that come out on top—the Global Finance FDI Superstars—shows both continuity and variability. This year’s list has seven countries moving up, two moving down, one holding steady and 10 countries that are new to Superstar status. Last year, the UK fell from first place right out of the top 20, largely due to Brexit. This year, Ireland, last year’s #2, and Switzerland, last year’s #4, also fell out of the top 20, in part due to US tax reform that sparked extensive repatriation of earnings. Ireland’s FDI went negative, with divestments reaching $66 billion.

Still, it wasn’t a bad year for FDI in Ireland. The Ernst & Young Annual European Attractiveness Survey identified a spike of 52% in the number of investment projects in 2018. BDO ranks Ireland as the fifth-most attractive destination in the world for foreign investors. And UNCTAD data shows a continued increase in the value of announced greenfield projects in the country, up by around 30% in each of the past three years and reaching close to $11 billion in 2018. Ireland may well be the most exposed to the potential consequences of Brexit, but it is also one of the main beneficiaries of the corporate exodus leaving the UK.

Ireland isn’t the only country getting a Brexit benefit. A Financial Times piece comparing greenfield projects in the three years before and three years after the referendum found that greenfield FDI increased in most countries except the UK, with countries Poland, Romania and Spain receiving the most.

“There has been a positive effect in the production of goods, and there are hints that some financial and consulting services may have been moving from London to Spain,” says Miguel Cardoso, chief economist for Spain at BBVA. Still, he cautions, “investment decisions to boost capacity have been delayed in sectors more exposed to external demand, like agrifood or automotive, especially in companies with a higher dependency on the UK market.”

With construction of new plants slowing, royalties, licensing fees and services represent a growing share of global capital flows. Corporations increasingly choose licensing deals or the sale of corporate services over equity ownership in their international relationships. In this landscape, the otherwise perfectly respectable use of intellectual-property licensing, together with a range of corporate tax-optimization strategies that have a less favorable reputation, have boosted what the IMF calls “phantom” FDI. These are investments that pass through special purpose entities (SPEs)—companies with no identifiable structure and no other goal than to channel capital into and out of a country—usually to avoid or reduce tax costs. Despite several international initiatives to curb the consequent tax-base erosion, IMF researchers estimate that the weight of phantom FDI has surged since 2009 from about 30% of global flows to almost 40%, or $15 trillion, in 2018.

This year’s FDI Superstars managed to post stable or growing inflows despite global headwinds. Resilience requires political and economic stability, solid investment protections and a business-friendly atmosphere. Some offer favorable tax and incentive programs to further entice investors. Talent is also an increasingly important asset.

Despite China’s slowdown and the global contraction of FDI, Singapore manages to maintain first place in our ranking, well ahead of the Netherlands at #2. Roughly half the size of London and with no natural resources to speak of, this global financial hub nevertheless competes with giants: It ranks fourth for total FDI, despite its size. The small Asian city-state has increased its GDP at an incredible pace since the 1980s, and now ranks 10th in GDP per capita, one position ahead of the US, according to IMF estimates for 2018. Singapore received $77.6 billion in FDI last year, a modest 2.5% increase from the previous year. It pulls in a share of FDI 15 times bigger than its share of world GDP.

Singapore benefits from its central position in the Asia-Pacific area, a stable pro-business institutional framework and a reputable education system. Although a favorable corporate-tax system is one of Singapore’s main enticements, according to corporate-services provider Hawksford, almost half of the multinational corporations based in Singapore have chosen to locate their headquarters there. US-China trade wars may accelerate the trend.

“Singapore is an excellent location for corporate regional headquarters because of the bilateral trade relationships we maintain with both China and the US,” says Irvin Seah, senior economist at DBS. “And while Singapore may not be competitive in terms of manufacturing costs, companies still prefer it for their regional headquarters because of our great logistic and financial connectivity.”

The Netherlands bucked the global downtrend, increasing its FDI inflows by almost 20% to $69.7 billion. According to UNCTAD, Netherlands FDI figures got a boost from intracompany loans, which this year contributed $17 billion. The M&A scene brought $40.4 billion to the table, with the acquisition of Akzo Nobel’s chemicals unit by US investment firm Carlyle and Singapore’s sovereign fund GIC adding $12.5 billion.

As noted in a recent IMF Economic Brief, FDI to the Netherlands is partially due to multinational companies channeling investments through the Netherlands to avoid taxes. But low taxes clearly aren’t the only enticement of the Low Countries. Business-friendly institutions, excellent infrastructure and an educated, English-speaking workforce make the country an excellent destination for productive investment.

The Netherlands Foreign Investment Agency (NFIA) estimates that 100 companies have moved to the Netherlands from the UK over concerns about losing access to the EU’s single market. According to Invest in Holland, some 372 companies invested some $3.2 billion in the country in 2018 and brought in 9,847 new jobs. Sectors that attracted more projects in the past two years include information and communications technology (ICT), services, transport and logistics, and life sciences and health.

The flow of foreign investment seems likely to be sustained, given that the number of greenfield projects announced increased to 307 in 2018, from 235 in 2016, according to UNCTAD. The value of those greenfield projects rose 38% in 2018 to $14.1 billion, the highest increase in Western Europe.

This economic powerhouse is on its 28th consecutive year of growth. Despite the global decline and stalling investment in its extractive industries, Australia saw an impressive 43% increase in FDI inflows in 2018, to $60.4 billion. According to UNCTAD, an increase in foreign investment income brought reinvested earnings up to $25 billion. M&A, with a net value over $33 billion, also carried important weight, especially in the financial and insurance sector, with $19 billion coming mostly from the sale of real estate investment trusts.

Last year, Australia established new measures to facilitate FDI, including creating a new online portal for project applications and raising the threshold of foreign ownership that requires government approval from 15% to 20%. Conversely, amid growing concern over Chinese influence, screening of foreign ownership in electricity infrastructure has been tightened and a new regulation requires that agricultural land be offered to domestic investors before it can be sold to foreign ones.

Australia offers an extremely solid economy, access to Asia-Pacific markets and an educated and culturally diverse English-speaking workforce, making it one of the preferred gateways to Asia, especially for American and British companies.

Spain enters the Superstars list this year at #4 after FDI inflows more than doubled, from $20.9 billion in 2017 to $43.6 in 2018. Some of the country’s enticements include excellent transportation networks, a restructured financial sector, a booming tourism sector, and cultural proximity and strong economic ties to Latin America.

BBVA’s Cardoso sees some shifts in FDI targets. “In recent years, changes in labor regulations brought a moderation of labor costs that helped significantly boost investment in the automotive sector, and tourism has also benefited from a lot of attention from foreign investors,” he says. “The novelty in the past year has been a growing interest in sectors more oriented to internal demand, like services and real estate.”

Spain’s spike in FDI inflows was mostly driven by M&A sales that UNCTAD estimates at $71 billion. The acquisition of Spanish highway operator Abertis by Italian Atlantia, Spanish ACS and German Hochtief alone drew in some $19 billion. Spain’s growth also spurred real estate deals: Blackstone acquired some assets of the old Banco Popular Español for $6 billion, and Cerberus signed a similar deal with BBVA for $4.7 billion. Cardoso expects M&A deals to continue: “The strong adjustment in the valuation of many Spanish companies and real estate assets after the crisis still offer high potential profitability.”

After a stark drop in 2015, FDI inflows to the Czech Republic recovered strongly in 2016 and have stayed mostly stable in the past three years. According to an Economic Brief from the European Commission, “almost one-third of all jobs in the Czech Republic are provided by multinational corporations (MNCs), more than in any other CEE country,” and the ratio of FDI to GDP has grown 600% since 1993. Czechia offers a stable environment, a skilled and relatively inexpensive workforce, good quality of life and a favorable location at the heart of Central Europe. The Czech government has strived to offer tax incentives and subsidies, especially in the manufacturing and technology sectors. In 2018, a new visa program was set up to award residency to non-EU citizens who invest a minimum of €1.9 billion ($2.1 billion).

The manufacturing sector, primarily autos and metallurgy, is a primary target of FDI; other sectors receiving significant FDI in recent years include financial services and wholesale and retail. The biggest M&A deals this year were in pharma and telecom, with the acquisition of generics producer Zentiva by private-equity firm Advent International for €1.9 billion, and Vodafone’s acquisition of Liberty Global systems for €1.4 billion.

The United Arab Emirates jumped from #11 last year to #6 this year. A model for political and economic stability in the region, the UAE held steady in FDI as well, at just above $10 billion. Investment flowed to a range of sectors, from traditional oil and gas to digital technology. And Abu Dhabi is creating a special FDI unit that will work to win foreign investment and facilitate the licensing of FDI projects. The UAE’s Doing Business ranking has improved significantly, rising from 31 in 2016 to 11 in 2019. Although restrictions to ownership remain, the country recently approved a list of 122 business segments across 13 sectors that are eligible for 100% foreign ownership.

The UAE’s low energy costs, natural resources such as oil, strong purchasing power and diverse international workforce are key attractions for investors, in addition to almost nonexistent taxation on business and personal income, the absence of any limits on capital repatriation and a strong banking sector.

Hungarian FDI inflows almost doubled in 2018, helping the country rise 74 positions in our ranking. After net divestment in 2015 and 2016, the country’s FDI has significantly recovered, although it’s still far from its 2012 record high. The Hungarian Investment Promotion Agency (HIPA) says 98 projects came to Hungary in 2018, backed with capital of more than €4.3 billion ($4.7 billion) and creating up to 17,000 jobs. With GDP picking up at good pace and the lowest corporate tax in Europe, at just 9%, Hungary has risen as a destination for FDI in Eastern Europe this year.

Hungary is among the countries that last year approved new screening procedures on certain strategic sectors, which could limit investment opportunities. On the other hand, the country has taken additional measures to reduce the corporate tax burden. In June 2019, a bill was approved that reduces the social-services contributions companies pay per employee to 17.5%. A two-point further reduction is expected next year.

The relative stability of Malaysia’s FDI flows amid a global contraction, a comfortable GDP growth rate, and excellent rankings in the Global Peace Index and Doing Business index helped launch Malaysia from #12 to #8 among our Superstars. Plus, the country seems to be benefiting from global trade tensions.

Although total FDI inflows have decreased, the Malaysian Investment Development Authority (MIDA) said the country’s approved FDI in 2018 had increased by 48% to $19.2 billion. Foreign investment in manufacturing surged by 169% to $13.9 billion, with China and Indonesia as the biggest contributors.

Government sources, referring to Malaysia as a “safe haven for international supply chains” partially attributed this increase to the US-China trade war. Chinese investments in the manufacturing sector soared, increasing by 411% to $4.7 billion, while US manufacturing investments grew by 185% to $770 million. According to MIDA’s figures for 2019, US investments are quickly accelerating, showing a 270% increase from last year. Malaysia is pushing to capture a bigger share of FDI, and in September approved streamlined procedures for the approval of foreign investments.

Despite geopolitical tensions, Israel has managed to maintain strong GDP growth in the past decade. It climbs from #17 last year. Despite the global decline in FDI and after a record increase in 2017, Israel’s FDI inflows grew by 20%, reaching an all-time high of $21.8 billion. According to PwC, M&A deals had a lot to do with it, increasing in value by 77% to $21.6 billion in 2018.

Israel has also earned a reputation as a hot spot for start-ups and an excellent location for R&D. It has the highest ratios of R&D spending among OECD (Organisation for Economic Co-operation and Development) countries.

While the US remains the main source of FDI, Chinese investors are showing increased interest. According to OECD, China’s FDI in Israel increased by 48% between 2016 and 2017. According to fDi Intelligence, both greenfield projects and venture capital investments from China are on the rise. Yet, stronger ties between Israel and China and the Chinese takeover of Haifa’s port have raised security concerns in the US and put pressure on Israel to screen investments in strategic sectors.

Canada vaults into the top ten from #55, as FDI inflows rose by a spectacular 50.6% to $39.6 billion in 2018. Canadian FDI dipped in the prior two years due to falling oil prices and uncertainty around the North American Free Trade Agreement, with 2017 showing the lowest figures since 2009. According to UNCTAD, divestments in the oil and gas industry in 2017 were worth $25 billion, but this drain stopped in 2018.

Canada offers a well-qualified workforce, business-friendly environment and important reserves of oil, gas and ore. With a marginal effective tax rate of 13.8%, it also offers the lowest business tax costs among G7 countries. Although FDI inflows in 2018 are still far from the country’s historic high in 2013, authorities are optimistic. Canada is reducing its dependency on oil and gas—and also its dependency on US investors, with an increase of more than 300% in non-US FDI in 2018. With Toronto and Vancouver recruiting tech workers at a faster pace than San Francisco and Seattle, Canada may well have shifted from losing talent to other countries to winning it. The Canadian government’s commitment to strengthening FDI was reinforced in November 2018, with the approval of a package of C$14 billion ($10.5 billion) in write-offs for capital investments.

Panama, with its strategic infrastructure and corporate-friendly regulations, rises a few spots after a year of record M&A deals that boosted its FDI flows by 21%. Hong Kong’s financial and trade hub follows, although this year’s protests will doubtless impact next year’s results. Despite losing some steam, Portugal showed significant improvement in the past decade. Oman makes #14 after an excellent year in greenfield investments, driven by the creation of the Duqm Special Economic Zone. In Slovenia, after a slump in 2017, privatizations and takeovers in the manufacturing and financial sectors generated an 81% increase in FDI. Vietnam has seen a decade of consistent FDI growth, and has recently been attracting increased Chinese and US manufacturing investment.

An improved business climate brought a wealth of greenfield projects that helped Serbia rise to #17 from #20 last year. After significant improvement in its Ease of Doing Business score and with very low corporate and personal income tax rates, North Macedonia, at #18, more than tripled its FDI flows last year. Declining after a peak in 2011, Latvia’s FDI inflows have significantly improved in the past two years, raising its stance in our ranking to #19. Rounding out our ranking is Indonesia, showcasing an outstanding recovery since 2009 with increased investments from Singapore, China and Japan, and confirming the South Asian region as one of the world’s most resilient in times of dwindling global FDI.

The Global Finance FDI rankings show that there is more than one path to the finish line in the race for development dollars. Whether by bolstering education or loosening regulations, strengthening infrastructure or opening access to natural resources, countries around the world are striving to attract the funds to take them to their next stage of development.

Our rising stars aren’t great economic powers, but have shown the greatest improvement over the past ten years. This list shows the most instability, because for small economies, a single project can mean huge relative change despite the stabilizing effect of the 10-year window. The shifting of the FDI landscape has brought additional turmoil this year, and only five countries from last year’s top 20 made it to this year’s list.

Palau and Aruba rise to the top, from #7 and #11, respectively, the prior year. Like many on this list, both islands posted negative inflows in our base year of 2009 and made solid recoveries. Palau pulled in a share of FDI more than six times its share of global GDP. Myanmar, likewise, came from such low levels of FDI a decade ago, when it was under sanctions, that it goes from #10 to #3. Rounding out the returning stars, Ethiopia has seen a rise of greenfield projects, mostly brought by Chinese and Turkish manufacturers.

Former European communist countries like Slovenia, Latvia, Macedonia, Czechia, Hungary and Lithuania make their appearance on the list this year, showing varying success in economic recovery after the 2008 financial crisis and integration into European markets. Israel and Spain are the only advanced economies among the most improved, showcasing Israel’s evolution toward a tech economy and Spain’s solid recovery from 2008. Bahrain and United Arab Emirates are reaping fruit from efforts to diversify their economies.

Outperformers don’t get the most FDI, but they get the biggest share relative to their share of global GDP. This measure mitigates the size advantage to highlight countries with the extraordinary ability to attract FDI far beyond their economic weight.

This ranking is led by small island states that have become FDI magnets by virtue of corporate-friendly tax and business regulations—so-called tax havens. Their economies are little more than overgrown financial systems, featuring extraordinary imbalances between FDI and GDP. The British Virgin Islands and the Cayman Islands, again ranked first and second this year, pulled in shares of FDI more than 900 and 3,000 times, respectively, their share of GDP. Malta, Anguilla, the Maldives, Saint Vincent and the Grenadines, Grenada and Cyprus also make the top 20 by offering low taxes and little transparency. Another traditional contender, Panama also benefits from key infrastructure for international trade.

The Outperformers ranks are also populated by relatively poor African countries whose rich natural resources are big draws. Oil-related investments raised Congo to #4 this year, and the discovery of new oil reserves and a round of exploration licensing initiated in 2018 could boost it further next year. Oil also kept Mozambique and Sierra Leone at #9 and #10, same as last year.

Somalia, holding steady at #5, and Djibouti, which appears in the list for the first time, are atypical cases among African countries. Sharing the advantage (and burden) of a strategic position at the entry of the Gulf of Aden, they find themselves at the center of an international push to control the access to the gulf. Several countries are investing to maintain control of the main ports of Somalia while China has passed investment agreements with Djibouti, where the construction of what will be the largest Free Trade Zone in Africa started in 2018. Chinese investment is fueling booms in Cambodia (#13) and Laos (#20), as well.

The only oil producer from Latin America on our list, Guyana, is a newcomer that jumps directly to #12 after doubling its FDI flows in 2018. This steep uptick was mainly due to the development of the oil fields discovered by ExxonMobil in 2015, although other investments in hydroelectric energy and mining were also recorded. Mongolia (#11), meanwhile, saw an increase of 45% in its FDI flows to $2.1 billion, with most of it going to the copper mines at Oyu Tolgoi. The mine is estimated to contribute to a third of government revenue in 2019.

FDI Giants attract the most FDI in raw terms, sometimes because they are the large, rich markets. The US and China lead the pack, followed by countries that are small but wealthy or particularly tax-friendly: Singapore (#4), the Netherlands (#5), and the United Kingdom (#6).

But market size isn’t everything. The roughly 7.5 million residents of Hong Kong, at #3, raked in nearly $116 billion—only slightly less than the $139 billion pulled in by the 1.4 billion residents of mainland China, at #2. Well-known tax havens with a financial services monoculture, like the Cayman Islands (#9) and the British Virgin Islands (#10), also score big.

Looking at the three-year trends, Vietnam has built a strong manufacturing hub that is now, together with a few neighbors, receiving FDI overflow from its increasingly costly neighbors. And Israel—a little country in the middle of one of the most geopolitically complex regions of the world—has managed to increase its FDI spectacularly in the past decade, especially in the past two years, building around a world-class innovation system with no parallel in any other country its size.

Global Finance analyzed data for 198 countries to build its 2019 FDI rankings.

We studied various success metrics to identify the countries that are most successful at drawing foreign direct investment (FDI). Raw inflows favor size, so this measure alone yields a list of economic powerhouses (The Giants, p. 109).

FDI inflows are notoriously volatile, especially in smaller economies where a single new project can double GDP. Our rankings mitigate that by considering performance over a decade. Still, even over time, raw measures tend to push out smaller countries; so we calculate each country’s share of FDI relative to its share of world GDP. This yields a dramatically different portrait, heavily populated with offshore financial centers that attract financial capital disproportionate to their share of global economic activity (The Outperformers, p. 110). A comparison with 10 years ago, ranking countries according to their movement up or down, yields a list showcasing the countries that have most dramatically improved their FDI competitiveness over the past decade (Most Improved, p. 111). Our Superstars algorithm incorporates all these metrics (p. 107).

Furthermore, we seek to identify countries with the best overall mix of FDI enticements, including the size of the economy, natural resources and social stability—but also smart policy; a nation’s active choices rather than its accidental benefits of geography. The algorithm thus also incorporates two additional factors: each country’s score on the World Bank’s Ease of Doing Business index and on the Global Peace Index compiled by the Australia-based Institute for Economics and Peace (IEP).

The World Bank’s Doing Business report ranks countries by their business regulatory environment, evaluating the ease of starting a business, government paperwork, access to utilities and credit, taxes and customs. It also considers the level of protection afforded to minority investors and how hard it is to enforce contracts and resolve insolvency.

In the belief that the factors that contribute to peace also drive a thriving economy and resilience to shocks, The Global Peace Index evaluates not only the absence of conflict, but “positive peace.” Components include good relations with neighbors, a well-functioning government, a sound business environment, high levels of human capital, low levels of corruption, respect for human rights, an equitable distribution of resources and the free flow of information. The IEP estimates that for 2005–2016, countries that improved their Positive Peace rankings produced 2% higher annual growth in per capita income than those with deteriorating scores.

After more than a decade of growth, capped by a record-setting 12 months in 2017, corporate cash stockpiling reversed trend last year. US companies, benefiting from the windfall of the Tax Cuts and Jobs Act (TCJA), seemed to finally loosen their grip on their cash hoards. And while a variety of capital investment projects account for much of the drawdown globally, stock buybacks are once again setting records.

Cash in the hands of nonfinancial Moody’s-rated US companies declined by 15.2% to $1.7 trillion in 2018, according to a June report from Moody’s Investors Service. The drop for Global Finance magazine’s 25 richest companies globally was a less-pronounced 8.3%, to $1.1 trillion by the end of fiscal 2018 from $1.2 trillion the previous year; while the average cash holdings of the Top Global Cash 25 fell to $43.6 billion from $47.6 billion.

Accordingly, the cutoff for a spot in our Global Cash 25 has declined to $22.6 billion from last year’s $24.4 billion; while at the upper end, Microsoft, the richest of the rich, has maintained its stash at around $133.6 billion of cash on hand, for just a 0.6% annual increase.

US companies still dominate the ranking, with 12—down from 13 last year—in the Global Cash 25, seven of them in the top 10. China and Japan are tied for second place with three companies each if we include China Mobile, headquartered in mainland China but incorporated in Hong Kong.

Big Tech’s Big Cash Piles

Tech giants continue to dominate the top positions in our ranking, but they too have significantly slowed their pace of cash accumulation. The TCJA has freed a huge amount of cash that companies were keeping overseas; although the biggest hoarders face a hefty bill for their foreign cash, which is deemed repatriated regardless of whether it actually moves to the US. The reduced corporate tax rate has left another good chunk of money in companies’ hands; the biggest hoarders have accordingly started to dole out their excess cash.

While Microsoft increased its cash hoard slightly, it increased its capital expenditures (capex) by 43% to $11.6 billion. The software giant’s stock buybacks have been modest by the standards of the industry; with up to $40 billion authorized for buybacks, it has repurchased only some $14.4 billion of shares in two years.

Google’s parent, Alphabet, again takes second place after growing its cash stash by more than 7% to $109.1 billion (despite doubling capex to more than $25 billion); although that’s slower growth than in 2017.

After spending $29 billion in stock repurchases, Oracle rises from sixth to third place. Despite reducing its capex by 14%, it showed only a modest 1.8% increase in its cash pile in 2018. Apple, the buyback king with $73 billion in repurchases last year, takes fourth place in the Global Cash 25—losing one position after reducing its cash balance by $7.9 billion, or more than 10%—while increasing capex by an unexceptional 7%.

 At another tech giant, Cisco Systems, the cash balance dropped by 34%, or almost $24 billion, the biggest cut of all among the Global Cash 25. That drops Cisco from fifth to seventh place, despite a 13% decline in capex. The cash drop was due to a substantial increase in share repurchases as well as the repayment of up to $12.4 billion of debt.

Japanese Shore Up Reserves

Although not the most cash-rich, the most active cash hoarders this year in absolute terms have been Central Japan Railway, which added $16 billion; Amazon, $10 billion; and Sony, $8 billion. Central Japan Railway (JR Tōkai) posted an 89% increase in cash to $34 billion, as it doubled its reserves to back construction of the Chuo Shinkansen maglev line.

Amazon, a strong cash-generating business, made no buybacks for the first time in seven years. It is reinvesting most of its foreign earnings, so even without other offsets its tax bill attributable to repatriation has been small. This has allowed it to amass an additional 33% of cash, raising its stash to $41.2 billion.

Thanks to improved profitability in its electronics division, and after two years of record operating profits, Sony added $8 billion to its cash pile: a 45% increase. But it might be on its way to increased spending in 2019; late last year, Sony closed on its $2.3 billion acquisition of EMI Music and is assuming EMI’s $1.3 billion debt. Sony also assigned another $2.7 billion to its stock repurchase program.

Trump Tax Cuts Rewrite Rules in the US

Enactment of the TCJA in the US at the end of 2017 drove the major shifts in cash holdings this year, completely changing the cash management playbook at American corporations and breaking their global cash-hoarding streak. Beyond slashing the corporate tax rate from 35% to 21% and offering a one-time tax holiday for repatriation of offshore earnings, it reduces incentives for corporate inversions by moving the US to an almost territorial system by which foreign earnings will mostly be free of taxation by Washington.

Proponents project the new tax rules to shower $1.35 trillion in savings on US corporations over the next decade.

How much in tax savings the TCJA will actually add to American corporate cash balances is hard to establish; but according to the Federal Reserve’s Financial Accounts of the United States for 2018, total taxes on nonfinancial corporations were cut by almost a third. The savings would have been even greater were it not for the extraordinary payments corporations made for their foreign earnings. Yet, corporate after-tax profits grew more than twice as fast as before-tax profits (16.2% versus 7.8%), and both grew much more rapidly than national income (4.7%).

President Trump stated in August 2018 that he expected $4 trillion of offshore assets to return to the US. A more cautious valuation by Invesco of US unremitted foreign earnings brings the funds available for repatriation to a far more modest $1.5 trillion, while a Fed paper from last September estimates them at around $1 trillion. The $776.5 billion that had actually been repatriated as of late June is still far from this figure, although about five times the $155 billion corporates brought home in 2017: still a lot of cash to burn.

A Little Something for Staff

A few companies made good on their promise to pass on some of the windfall to workers: Apple hired 6,000 more people, Walmart raised its starting salary to $11 an hour and Bank of America gave bonuses to employees. But there were trade-offs. AT&T distributed bonuses and made extraordinary contributions to employees’ and retirees’ benefits funds, but it also cut more than 10,000 jobs. Verizon made a grant of shares to employees, but it cut more than 3,000 jobs.

In the aggregate, wages received a mere sprinkling from the tax break. Employee compensation, as reflected in US Financial Accounts, grew at a slower pace than national income—despite what many consider to be an economy technically at full employment.

Many companies announced they would take advantage of the extra cash to repay debt. Apple, for example, announced it would become net cash neutral. But an analysis by a Federal Reserve research team last fall of the top 15 holders of offshore cash found that the companies’ aggregate debt had declined by only about $15 billion, or 2% of their total debt. Although this analysis is limited to the first quarter of the year, it suggests that for those who had the money to do so, credit was still cheap enough that they had no reason to use their excess cash to pay down debt.

Buybacks Set a Record

Most of the extra cash went back to investors, partly through dividends but mostly through share repurchases. Buybacks shattered all records. TrimTabs raised its figure for 2018 repurchases by US companies to a staggering $1 trillion. Companies in the Standard & Poor’s 500 bought back a total of $806 billion of their shares last year.

The cash-richest led the buyback frenzy. In May 2018, Apple, which had already been repurchasing at a furious pace, announced a $100 billion buyback program. The actual repurchases by the end of the fiscal year came to $73 billion, cutting by 6.5% Apple’s shares outstanding. Oracle was a distant second, with $29 billion of buybacks that reduced its shares by 12%.

All told, last year’s $800 billion in buybacks outstripped capital expenditures, at slightly more than $700 billion, for the first time since 2008, according to Citigroup; and the TCJA appears not to have had a significant impact on investment in the short term. On one hand, repatriation is an accounting operation that does not necessarily mean the money actually moves to the US; it could very well be sitting in an account in the Bahamas or be reinvested abroad.

On the other hand, companies that have been repatriating the bulk of their overseas earnings have not suffered from any restrictions or excessive costs to access credit in recent years, so it was not reasonable to expect any significant boost to investment from the tax holiday.

According to data from the Fed, real private nonresidential investment increased faster than the previous year but stayed close to its previous trend. Meanwhile, capex actually slowed in 2018. The TCJA’s longer-term effect on investment, if any, will come from the reduction in corporate taxes and the elimination of disincentives to the repatriation of foreign earnings.

North America

There are no Canadian companies on our list of the most cash-rich in North America: no surprise, since technology giants once more occupy the entire top five, although with some shifts in position.

Oracle climbs from fifth to third, thanks to Apple and Cisco reducing their cash positions. Amazon takes the biggest step forward, moving to sixth place from 12th, aided by its zero-buybacks policy and a cheap bill for repatriations. Cisco lost the biggest chunk of cash, with a 34% reduction of its balance after substantial buybacks and repayment of part of its debt.

The pharmaceuticals maker Amgen cut back almost 30% of its cash pile, losing two positions in the ranking. Amgen repurchased $17.9 billion worth of its own stock last year, almost six times the amount it bought back in 2017. The new Trump tax policies also burdened the company with a tax bill of more than $6 billion.

Latin America

The ranking of Latin America’s top cash hoarders is distorted somewhat by the presence of Chinese companies incorporated in the Cayman Islands. Tech takes over the first position this year, with Beijing-headquartered Baidu getting in ahead of Petrobras.

The state-owned Brazilian oil company shows the most significant cash reduction, down $9.4 billion from the previous year. Two more Chinese companies follow: travel services provider Ctrip in third and internet technology company NetEase in fourth place.

Suzano, the Brazilian paper and cellulose producer, climbed from nowhere to fifth position after its fusion with Fibria boosted its total assets 61% and multiplied its cash balance almost sevenfold.

With a 59% increase in its cash balance, Chinese smartphone market leader Xiaomi, which might be gearing up for expansion in Europe and the US, shows up in eighth place as the second newcomer to the list this year.

Western Europe

The top four spots on our list of the richest Western European companies remain in the same hands as last year, albeit with some reshuffling.

With four of the first five positions, the oil and gas industry dominates the top of the ranking; but after four years at the top, Total comes in second, giving up its position to Daimler.

Total pared back its cash reserves by 15.9% in 2018 after buying French electricity and gas provider Direct Energie for $1.7 billion and accelerating stock buybacks. Shell, with 32% more cash in its pile, comes in at third place; while BP, second last year, steps down to fourth position and Italy’s ENI completes the top five.

In the big surprise this year, BHP multiplied its cash balance by a factor of 17 and jumps directly to ninth place. After selling its US onshore shale oil and gas business for $10.8 billion, BHP enjoys a healthy balance sheet and plans to give most of its cash back to investors.

Central and Eastern Europe and Turkey

The Central and Eastern European cash rankings are a Russian and Turkish affair, with the Russian oil and gas sector taking five of 10 places, including the first four. State-owned companies also have a strong hold among the region’s cash-rich.

Little changed from the previous year in the Eastern European ranking. Nine of the top 10 were already there last year, and movement within the ranking was minor.

After a spectacular increase in its cash balance due to rising prices and a falling ruble, Rosneft takes over the first position; it plans to use some of its hoard to reduce debt. Gazprom, last year’s champion, takes second place.

With their positions unchanged, Lukoil is third, Surgutneftegas fourth and the Russian aeronautics company United Aircraft fifth. The only newcomer to the top 10, Turkish mobile phone operator Turkcell, replaces the Polish oil refiner and retailer PKN Orlen in last position.

Asia-Pacific

Despite a $9.5 billion reduction in its cash hoard, China Mobile stays at the top of our Asia-Pacific ranking. China State Construction Engineering and Toyota Motor switch places, coming in second and third, respectively. Central Japan Railway keeps fourth position, and Samsung climbs one spot to close the top five.

The biggest cash boost was posted by Central Japan Railway—rising 89% to more than $34 billion—which increased mandatory reserves to back the construction of a new magnetic levitation line. Sony follows, gearing up its cash pile with an additional $8 billion.

Middle East

Despite a decline of $4.4 billion, state-owned Saudi Basic Industries retains its top position. Qatari telecommunications provider Ooredoo climbs one spot to third.

In fourth position is newcomer Industries Qatar. The petrochemicals and steel conglomerate reported a 41% increase in revenue and a 52% increase in profits in 2018, while strong cash flow and reduced capex raised its liquid assets to a record figure. Industries Qatar is planning to spend part of its cash on projects to increase production in its petrochemical and fertilizer segments.

Africa

South Africa sweeps the board in our African ranking, only two Nigerian companies challenging its command. The top five, all South African, remain almost unchanged.

Media conglomerate Naspers stays in first, widening its lead by almost tripling its cash. Its liquid assets reached $11.4 billion thanks to the sale of a 2% interest in Tencent for $9.8 billion. Telecommunications provider MTN and chemicals and energy producer Sasol switched positions to take the second and third spots, respectively, while the logistics and shipping company Grindrod takes the fourth and Aspen Pharmacare the fifth positions.

In sum, the growth of cash is slowing among most large corporates worldwide, and capex spending is dropping—particularly in North America. At the same time, the global economic slowdown, combined with a drop in interest rates worldwide, will offer a new challlenge to corporates worldwide. Will they continue to hoard cash for rainy days, holding off on expansion plans? The next year or so will prove whether 2019 represents an exception or whether these trends will gain momentum, becoming the new normal. 

Methodology

The Global Finance Cash 25 ranks publicly listed companies by the cash, cash equivalents and short-term securities (those maturing between three months and a year) on their balance sheets. Data from more than 75,000 companies worldwide, excluding financial institutions and nonpublic companies, was supplied by Orbis – Bureau van Dijk. Subsidiaries are omitted as well; we eliminate any company more than 25% owned by another company.

The shadow of Brexit, which is impacting many multinationals, fell over Britain during the past year and drove many changes among the top nations in the Global Finance FDI Superstars ranking. Britain, last year’s No. 1, fell out of the top 20 entirely, while Ireland took some of its business and moved up to No. 2.

Singapore, one of the main commercial and financial gateways between Asia and the rest of the world (despite its size) and last year’s No. 2, slid into the top spot.

In addition to Brexit, political tensions and crumbling international trade relations contributed to a 23% decline in global flows last year, when the UK was No. 1 and the US took 13th place. This year, both disappeared from the top 20. Rising protectionism and uncertainty about US tax, trade and investment policies under the Trump administration have taken a toll. According to the United Nations Conference on Trade and Development (UNCTAD), FDI’s global decline can also be attributed in part to a 22% decrease in the value of cross-border mergers and acquisitions—even discounting the deals that inflated 2016 figures, the decrease remains significant.

The biggest story of the past year has not been the winners but the losers. The latest Republican tax reform in the US is currently driving an even bigger dip in global FDI, according to UNCTAD’s data for the first half of 2018. As American companies repatriated funds from their affiliates abroad, their reinvested earnings from abroad plummeted from $147 billion last year to negative $247 billion this year, taking world FDI flows down by a staggering 41%.

Europe appears to be taking the worst hit, with Ireland and Switzerland the region’s most affected locations. UNCTAD officials fear a further contraction of global FDI could impact global value chains and trade. Cross-border M&A remains stable, but the only upside in the latest data is a rising number of greenfield projects after a poor 2017.

FDI in the UK suffered a devastating 92% drop in 2017, to just $15 billion, accounting for more than 40% of the global decrease. To be sure, the previous year’s figures were overblown by a few large M&A deals; but even discounting for this anomaly, UK results this past year were so poor that one must go back to 1994 to find lower FDI inflows. The first half of 2018 has seen a recovery, with increased intrafirm loans upping inward flows to $66 billion.

Across the Atlantic, inward FDI flows fell by a less-dramatic but still substantial 40% in 2017. While the US remained the first destination for FDI, policy uncertainty, deeper scrutiny of investments, tariff wars and the administration’s stance on trade led international investors to curb their enthusiasm, and for the first half of 2018, the US fell to third place. Reduced corporate tax rates and full expensing of investment should help attract FDI, but foreign investors don’t seem to be very eager. After some improvement in the first quarter of 2018, in the second quarter the US saw a net outflow. Chinese investors are facing new restrictions from their own government, and Trump’s increasingly antagonistic stance toward Beijing is driving most of them toward Europe. Sweden, the UK, Germany and France were the top destinations for Chinese investment in the first half of 2018, according to Baker McKenzie.

Those at the top of our core FDI Superstars ranking this year posted solid inflows, improved in their relative position in international markets, delivered economic and political stability, and have created an investor-friendly environment that enabled them to climb the rankings despite strong headwinds.

Singapore is an FDI wonder. Less than half the size of London and without any natural resources, the city-state’s economic openness, business-friendly institutions, educational attainment, well-developed financial-services sector, and political stability have made it a magnet for overseas investment. Even after a decline of almost 20% in incoming FDI last year, Singapore was the fifth-largest recipient, attracting a share of FDI more than 11 times its share of world GDP. It has risen 62 positions in the FDI Performance ranking over the last decade. Prospects for 2018 look strong again, according to UNCTAD, even though US multinational companies divested $34 billion.

Ireland climbs two positions in our Superstars ranking this year, doubling last year’s figures. Ireland’s growth forecast is significantly higher than for most of the EU. Yet its favorable tax system, well-educated workforce, and access to the EU common market may not be enough to keep the FDI machine going in 2018. Since many American companies started repatriating earnings following the passage of a major tax-cut bill there, inflows to Ireland have taken a nosedive. According to UNCTAD, FDI in Ireland was down $81 billion in the first half of 2018.

Breda O’Sullivan, manager of corporate strategy and planning at IDA, the Irish investment promotion agency, says the IDA secured 237 new investments. Brexit has been a factor behind more than 40 companies adding or expanding in Ireland, according to the IDA. Technology, financial services, and pharmaceuticals were particularly favored, with companies such as Abbvie, Xilinx, Stats, Huawei, Stripe, Pilz, Sojern and SentryOne have relocated or expanded activities on Irish soil.

After a post-crash record in 2016, the Netherlands saw FDI tumble more than 30% last year. Still, in the context of a global FDI contraction, it held on in third place. The FDI climate in the Netherlands is gaining strength, due to “its infrastructure, the workforce’s education and language skills, the fiscal climate and its pivotal location in Western Europe,” says Hugo Peek, CEO of EMEA, corporate and institutional banking at ABN AMRO. “Liquid capital markets and the available skilled workforce are benefitting technology—in particular, fintech and medtech—and logistics, especially warehousing and retail distribution.”

The Netherlands is attracting a noticeable number of Brexiting firms in the trading business. The European Medicines Agency, for instance, is moving to Amsterdam in 2019; and many companies in the pharmaceutical and health sciences sectors are expected to move some operations to be close to the agency.

However, “With low unemployment rates, high occupancy rates in offices and rising house prices, it is not getting easier to establish oneself in the Netherlands,” says Peek. Since the UK is the country’s third-largest trading partner, Peek suggests that a hard Brexit might also have some negative impact “on logistical hubs such as the Port of Rotterdam and the maritime industry in general, as well as on fruit, vegetables and fishing exports.”

Switzerland, which didn’t even make the list last year, vaults to No. 4. The confederation has traditionally been attractive to FDI, thanks to its economic and political stability, favorable tax laws, business-friendly regulations, world-class infrastructure and highly developed financial system. Cantonal administrations offer significant tax incentives that add to the country’s enticements. Nevertheless, FDI in Switzerland has been very volatile, due to the country’s role in indirect-financing practices by multinational. As a result, Switzerland, along with Ireland, has been one of the countries most impacted by US corporations’ repatriation of funds in the first half of 2018, with US FDI in the country dropping by around $31 billion according to UNCTAD—making its performance even more impressive.

Portugal advances to fifth place. Parallel to the country’s broader economic recovery, the last three years have seen a sustained recovery in FDI despite the global dropoff. While Portuguese GDP has still not rebounded to pre-2008-crisis levels, the country’s evolution is sometimes called the Portuguese “miracle.” Export revenues are expanding, driven by tourism but also by goods exports. Investment is growing in machinery, especially equipment, and software. Demand for durable goods is growing and the national unemployment rate is slightly below the EU average.

The government, additionally, is finding more-direct ways to encourage FDI. The Golden Visa residency-by-investment program and tax exemptions for new residents who invest in the country have significantly improved Portugal’s attractiveness for FDI, not only for non-EU residents but for an increasing number of EU retirees looking for low taxes and a high quality of life.

According to the European Parliamentary Research Service, between 2013 and 2018, up to 9% of first-time residency permits were granted through this program. Foreign money, along with reform of the law governing property rentals, created the conditions for a boom in the real estate market. Portugal isn’t the only country that offers such visas; its tax exemptions, attractive cities, and qualified and relatively cheap labor have further made it attractive to tech startups.

Cyprus advances two positions in this year’s ranking to sixth place. Because Cyprus has become a strong intermediation hub, inbound FDI has been quite volatile; but in the last few years, it seems to have steadied. In 2017, Cyprus raised a share of global investment equal to some 17 times its share of world GDP. The Cypriot economy seems to be recovering from 2008, public debt appears to be on the mend, and almost all sectors of the economy are showing positive growth, with tourism in the lead.

“This is the easternmost jurisdiction of the EU, in an area of unstable, non-EU countries; and that is very appealing for companies wanting to access [Middle East and North African] markets but also gain a foothold in the EU,” Natasa Pilides, deputy minister of shipping and former director general of promotion agency Invest Cyprus, told Global Finance in February.

Cyprus’s Citizenship by Investment program was modified right after the country’s banking bailout in 2013 to make it more enticing—it is the fastest route to an EU passport, requiring just three months and €2 million. Reforms enacted in 2015 made the tax system even less burdensome for high-net-worth individuals seeking EU citizenship through investment. Since then, FDI has grown more rapidly, but the EU has put visa and citizenship programs under scrutiny—Cyprus being one of the most harshly criticized. The Cypriot Fiscal Council has also shown disapproval, warning that continued reliance on the program might divert resources from productive sectors of the economy. The government recently announced that it will increase vetting of investors and limit the number of passports granted to 700 per year.

The Czech Republic leaps 15 steps in this year’s Superstars ranking, from 22nd last year to 7th position this year, despite the 24% dip in FDI after hitting a post-crash record in 2016. One cause was the cooling of the M&A scene after four very strong years, prompting a drop in the number of transactions and a small negative net result. This meant the value of acquisitions by foreigners was slightly overmatched by foreign divestments in Czech companies.

Nevertheless, the Czech Republic was the largest recipient of FDI in Central Europe this year, outstripping Poland. The economy is posting strong growth and a low unemployment rate. The banking system looks healthy, while a strong industrial sector is another a strong selling point. Investors in the country benefit from moderate labor costs, an educated workforce largely competent in English and also in German, a good standard of living, reliable infrastructure, a central position in Europe and high social stability. Despite losing three positions last year, the country’s rank in the Ease of Doing Business index rose to 30th in 2017—just four years ago it was 75th.

Inflows were down by 11% this year, yet Hong Kong gained three positions in our ranking. M&A has helped: Although the number of transactions has decreased, the net value of deals for Hong Kong companies more than doubled in 2017, accounting for almost one fifth of FDI flows into the country. Many of these deals involved Mainland Chinese firms buying into Hong Kong’s real estate and insurance sectors.

Like some other countries in our list, Hong Kong has overcome the disadvantage of a small domestic market, winning an important position in the world’s trade and investment networks by providing top-notch financial, technological and logistical services. Hong Kong is the third-largest recipient of FDI in the world, trailing only the US and China, and also comes in third by FDI Performance, pulling a share of FDI more than 17 times its share of world GDP.

Australia slid four places this year. While its performance—according to most of the indicators that factor into our index—is in the upper range, its economy is less entwined with global value chains and trade and investment networks than some competitors. It is physically far from the rest of the world. That adds up to a relatively poor FDI performance, with a weight in world FDI only 50% above its weight in world GDP.

Australian FDI flows dropped by $1.4 billion, or 3%, to $46.4 billion last year owing to a $2.8 billion decline in the net value of cross-border M&A deals. UNCTAD’s World Investment Report notes that UK-based global corporations took a good share of the blame as they disposed of Australian assets.

Nonetheless, Australia’s FDI stock kept growing at a good pace; and the many overseas investors in Australia continue to enjoy the advantages of one of the world’s most stable economies, now entering its 27th consecutive year of growth. Although US and EU investors own the bulk of Australia’s FDI stock, its ties with Asian countries are increasingly strong, with Chinese FDI growing at an average of 19% each year since 2011, according to Austrade. Other fast-growing investment sources are Singapore and Hong Kong, and, outside of Asia, Canada. According to Austrade data, the main targets for FDI in Australia are finance and insurance (41% of total assets), other services (31%), mining (17%) and manufacturing (11%).

After an extremely poor 2016, when it posted the worst results for FDI in the world, Austria is making a comeback this year, jumping to the 10th place of our ranking. Traditionally a solid destination, Austria’s take had been on a downward trend since 2013, reaching net divestment of $9 billion in 2016. Most of these assets were shed by investors in Italy (-$7.5 billion), the Netherlands (-$2.7 billion) and the US (-$2.6), while others including Germany ($1.5 billion), Russia ($1.3 billion) and Luxembourg ($1 billion) offered a modest counterbalance.

This year, Austria has turned the picture around, attracting $9.6 billion of net investments. The economy’s slow advance between 2012 and 2016 may have weighed on the country’s ability to attract FDI; but at 3% in 2017, GDP growth seems to have regained steam. Austria offers a fairly business-friendly environment, an advantageous location in the center of Europe with good infrastructure, a highly productive workforce and a high quality of life. However, Austria now faces competition from former Soviet Bloc countries—including for capital of Austrian institutions—and as in other European countries, the recent rise of populism may be weighing on its reputation for political stability.

Rounding out our top 20 are the increasingly diversified United Arab Emirates, followed by Malaysia, which continues its record of dependable growth. Right behind are Azerbaijan, which boasts investor-friendly policies and economic diversification. Generous regulations for FDI bring Panama to number 14. Increased cross-border M&A lift France to the 15th position and stable Ghana follows as the first African country to join the ranking. Israel, where the value of cross-border M&A almost quadrupled, follows. After a slump in 2016, Indonesia is recovering, landing it in 18th place. Germany follows, doubling on the previous year’s disappointing FDI figures, and Serbia, where ongoing reforms tied to its EU accession process and its June agreement with the International Monetary Fund appear to be bearing fruit, completes the list.

They may not be the most powerful or the most efficient, but the Rising Stars are countries whose inflows improved the most over the past 10 years, boosting their positions in the FDI Performance ranking.

This is the list that shows the most variation year to year, as many of these countries have such small economies that relatively small variations in FDI can make a huge difference, and it’s the list most likely to show upstarts.

However, this year’s list is led by Ireland and the Netherlands, both relatively large economies and big recipients of FDI. That’s because both had extraordinarily negative FDI a decade ago, in 2008, resulting in a big rebound when they returned to normal growth. The other two European countries on the list are Portugal (15th) and Switzerland (17th). Switzerland, like Luxembourg last year, appears here due to the high volatility of its FDI flows.

Azerbaijan drops only one position to 3rd, thanks to the boost to FDI that followed the discovery of new oil and gas sources in the Azeri–Chirag–Gunashli and Shah Deniz fields. Sierra Leone, after a slump due to the Ebola epidemic, benefitted from a recovery in iron ore exports to quadruple the previous year’s FDI figures and rise from 10th to 4th place.

Ethiopia (5th) is the fastest-growing economy in Africa and the continent’s second largest magnet for FDI inflows in 2017 after Egypt. Despite political unrest, international investors are holding onto their bets. Global apparel firms are setting up factories there, and Chinese and Turkish companies announced plans to make light manufacturing and automotive investments after the government lifted a state of emergency in August 2017.

Some countries, mostly African, also have natural resources to thank for increased FDI flows in their economies. Often, these countries are recovering from periods of conflict or high instability, or from authoritarian regimes, or from natural disasters that had kept growth and investments at minimal levels.

And of course, there’s Singapore, one of the FDI elite that took a hit during the 2008 crisis but has since rebounded impressively.

While Giants get the most FDI, which countries get more FDI than their markets would warrant? We measure the most efficient FDI magnets by comparing the proportion of FDI a country attracts to its proportion of global GDP.

A country producing just 2% of global GDP but attracting 8% of global FDI is punching above its weight, an outperformer. Outperformers tend to be either richly endowed with natural resources or financial hubs built on loose regulations.

Small island nations with generous tax laws and hyperdeveloped financial systems once again make up a substantial share of the list. The British Virgin Islands and the Cayman Islands stayed on top this year, galaxies ahead of the other top performers with global FDI weightings that vastly outpace their weights in world GDP.

On the resource-rich side, Africa contributes to the Outperformers list. FDI flows follow natural resources, but also political and social stability and economic reform. Mozambique slid three positions to 9th this year; Sierra Leone, rose four positions to 10th; and Congo, tumbled five positions to 12th.

Somalia, excluded last year for lack of GDP data, jumped straight to 5th place, with a share of global FDI more than 15 times its share of world GDP. Relative stability following the nation’s long civil war allowed for the return of refugees and new investment. Conflict in the Arabian Peninsula has fueled the fight to control access to the Gulf of Aden, attracting significant investment to Somali ports.

Two new Asian countries join the Outperformers this year: Mongolia (13th) and Cambodia (16th). Mongolia’s mining sector is benefitting fromthe recovery of commodities prices, and 2017 also brought important investments in the energy sector. Chinese investments in infrastructure, industry and banking have steadily and significantly boosted FDI in Cambodia over the last 10 years. New Caledonia, strongly dependent on nickel, is down four places to 15th.

Georgia climbs two spaces to 17th. Ranking 6th on the World Bank’s most recent Ease of Doing Business index, Georgia is now one the most liberal and business-friendly focused-investment destinations in the Caucasus.

Low taxes, a welcoming business environment and a boost in real estate investment also earned Montenegro 18th place. This is the first time it has joined the list, making the mountainous republic the only European country to earn a spot this year aside from Malta and Cyprus.

These Goliaths of FDI attract the most outside direct investment in absolute terms. While this ranking usually receives the most attention in the media, it favors size by three measures—GDP, population and area—over performance. The US, China, Germany, France, India, Brazil, Canada, Indonesia, Russia, Mexico and Australia all make the top 10 in at least one of these three measures—even though none qualifies as a Superstar.

Spain (19th) may not qualify as one of the giants, but is the 30th-largest country by population and ranks 14th by GDP. Some smaller jurisdictions, like the Netherlands, Hong Kong, Singapore, Switzerland, the British Virgin Islands, the Cayman Islands and Ireland, have overcome their size by building on other advantages. A strategic location, important ports, historical ties to regions on the other side of the globe or a strong tradition in trade are the cornerstones on which some of these have built solid economies that are very effective at attracting FDI. Many rely on low-tax regimes, privacy protections or business-friendly regulations. While international pressure has forced most of these countries to increase transparency in recent years, they still offer many regulatory advantages and sophisticated banking and financial sectors that have developed under the umbrella of those regulations.

Israel, which closes the top 20, doesn’t quite fit any of these patterns. It makes its first appearance in the top 20 this year, reaping $19 billion of FDI, an extraordinary increase of almost 60% over 2016’s record total. A big part of its success can be explained by a cross-border M&A frenzy, mostly in the pharma and tech sectors. The biggest deal was the acquisition of collision-avoidance systems specialist Mobileye by Intel for more than $15 billion, an extraordinary figure for the Israeli market. The pharmaceutical company TEVA has been selling parts of its business, raising $2.5 billion to repay part of the debt it took on to acquire drug maker Actavis Generics last year for $40 billion. According to a PwC Israel report, Israeli assets sold to foreign companies reached $6.6 billion, Mobileye excluded.

Global Finance studied various metrics in its efforts to identify the countries that are most successful at drawing foreign direct investment (FDI). Raw inflows favor size, so this measure alone yields a list of economic powerhouses (The Giants).

Our algorithm mitigates FDI’s notorious volatility, especially for smaller countries, by considering performance over a decade. Still, even over time, raw measures tend to push out smaller countries; so we calculate each country’s share of FDI relative to its share of world GDP. This yields a dramatically different portrait, heavily populated with offshore financial centers that attract financial capital disproportionate to their share of global economic activity (The Outperformers,). We also compared rankings of today with ten years ago, which yields a list of countries that have most dramatically improved their FDI competitiveness over the decade (Rising Stars). Our Superstars algorithm incorporates all these metrics.

Furthermore, to identify countries with the best overall mix of FDI enticements, we look not only at market size, natural resources and a robust labor force, but also smart policy—a nation’s active choices rather than its accidental benefits of geography. The algorithm thus also incorporates each country’s scores on the World Bank’s Ease of Doing Business index and on the Global Peace Index compiled by the Australia-born Institute for Economics and Peace.

The World Bank’s Doing Business report ranks countries by business regulatory environment, evaluating the ease of starting a new business, government paperwork, access to utilities and credit, taxes and customs. It considers the level of protection afforded to minority investors and the judicial underpinnings of contract law.

In the belief that the factors that contribute to peace also drive a thriving economy, the Global Peace Index evaluates not only the absence of conflict, but “positive peace.” Components include good relations with neighbors, a well-functioning government, a sound business environment, high levels of human capital, low levels of corruption, respect for human rights, an equitable distribution of resources and the free flow of information.

The composition of the ranking changed significantly this year; only eight of last year’s best-performing companies kept a place in the top 25. Competition at the top is high as the numbers of the smartest companies improve. The average solvency ratio increased by 2.6 percentage points to 75.4%. Average return on assets grew 4.8 points to 19.2%, and average profit margin increased 7.5 points to 34.5%.

Petrochemical and mining companies remain largely distanced from the top ranks, despite a nascent recovery in oil. That has brought greater diversity to the list. IT services, construction and civil engineering, transport and logistics, and wholesale and retail trade companies have an increasing presence among the top 25 this year, while hotels, restaurants and food-sector firms are scarcer, along with oil and mining.

Although growth started recovering in 2017, South Africa took a hit this year with only 9 companies, compared to 14 last year. The great beneficiary has been Egypt, which went from two companies represented last year to seven this year.

The geographic balance is likely to keep shifting as South Africa’s economy dwindles—in technical recession since the second quarter. John Ashbourne of Capital Economics says this year “the outlook is, again, very poor for the larger economies in Africa,” and while the worst seems to be over he still sees weak growth ahead.

Nigeria suffered a painful recession in 2016 and 2017, and its recovery is faltering. Ashbourne says growth should pick up in the coming months, but nevertheless, “with the country’s politicians gearing up for next year’s election … there is very little chance of a real policy shift, so conditions will remain very weak.”

Prospects are better for smaller sub-Saharan economies. “Kenya is growing well, as are Ghana and Côte d’Ivoire,” Ashbourne says. “Ethiopia is also quite an exciting place at the moment.” The fastest-growing African economy in the last five years, according to the IMF, Ethiopia is gaining momentum. “The new prime minister has launched a faster and more ambitious reform program than we had expected,” says Ashbourne. “It is a very positive sign that the leadership is planning ahead.”

In northern Africa, Egypt’s growth is expected to pick up. A looser monetary policy and slower fiscal consolidation should bolster growth, and the Egyptian pound, devalued in 2016, should sustain exports. “Expectations for the agricultural sector are poor, but the rest of the sectors are performing well, and investment continues to pour into manufacturing,” says Jason Tuvey, analyst at Capital Economics. His firm’s outlook for Morocco is modest for 2018 and more positive further out, while Tunisia is more sluggish. Tourism seems to be recovering, but the balance of payments is a concern.

These highly changeable rankings illustrate the rapid pace of change in Africa. Market and geopolitical forces seem to be working toward increased diversity among the best-performing companies—and helping Africans move up the value chain, beyond raw materials.

The richest were richer than ever as 2018 began. Last year, the cutoff to make the top 25 was $16.3 billion in liquid holdings, and only the top 10 had more than $25 billion. This year, the cutoff for inclusion soared to $24.4 billion, and all but one of the top 25 have more than $25 billion.

This year, we expanded our criteria to include all publicly traded nonfinancial companies—even those with majority state ownership. Prior lists excluded any company with more than 50% government ownership, but we sought to give readers a window into the financial position of state-controlled firms. This brought significant new entrants to the regional lists in Central and Eastern Europe, the Middle East and Asia.

Geographically, US companies continue to dominate the ranking, accounting for 13 positions, seven of them in the Top 10. Japan contributes four companies while China adds three, if one counts China Mobile, headquartered in Beijing but incorporated in Hong Kong.

Technology giants stay ahead in our sixth annual ranking. The top US big tech firms alone account for a whopping $446.7 billion in cash, 12% more than the previous year. Microsoft stays at the top of this subgroup for the third year in a row with almost $133 billion in cash and cash equivalents, up $19.7 billion from 2016, despite chalking up capital expenditures (capex) of $8.1 billion—roughly the same level as 2016.With $101.9 billion, Google’s parent, Alphabet, has the second-biggest cash stash, adding more than $15 billion to its pile. Apple comes third, followed by China Mobile, the world’s largest mobile company by market capitalization. Cisco moves ahead of Oracle.

For many other companies, growth in their cash holdings is linked to acquisition plans. AT&T, 8th, grew its cash stash from $5.8 billion to $50.5 billion in just one year, mainly by resorting to the bond market. That bumped up the resources available for the company’s planned acquisition this year of Time Warner—finally approved in June after an intense judicial battle, although the decision may be reversed on appeal. Gilead Sciences spent $11.9 billion on the acquisition of Kite Pharma, and at the end of the year still had $25.5 billion on its balance sheet and may be on the lookout for other M&A deals. Qualcomm, on the other hand, recently announced that, in the pall of the US-China trade war, it is dropping its offer to buy NXP for $44 billion after failing to obtain approval from China’s antitrust agency. Instead, the company will spend $30 billion on buybacks.

Central Japan Railway Company (also known as JR Central or JR Tokai) debuts on the list in 16th place. Financing needs for construction of the Chuo Shinkansen magnetic levitation line led JR Central to create a dedicated cash fund that the company has generously fed for the last two years. Another Japanese newcomer is SoftBank Group, which has been raising cash to keep its leverage ratios in line as it pursues an aggressive investment policy.

A change in eligibility criteria brought in a few newcomers previously excluded because of their ownership structure, including three from China: China Mobile in 4th place, China State Construction Engineering at 10th, and China Petroleum & Chemical (Sinopec) at 17th. Of those, only Sinopec saw a noteworthy increase in its cash and cash equivalents in 2017, although its cash-to-total-assets ratio is still an unimpressive 13.6%.

Will 2017 represent a high-water mark for corporate cash holdings? Don’t assume it. The American Tax Cuts and Jobs Act (TCJA) profoundly changed the landscape for corporate-finance practitioners, slashing the top US corporate tax rate from 35% to 21% and allowing a one-time cash repatriation holiday. Will US companies reinvest those tax savings? Pay down debt? Give raises? How much will they retain? Will the M&A juggernaut continue?

The direction cash-rich companies will steer post-TCJA is still unclear. In its April 2018 Liquidity Survey, the Association for Financial Professionals (AFP) found that up to 40% of respondents were still unsure of the new law’s implications and didn’t anticipate any changes in their company’s expenditures. Almost one in four companies were repatriating overseas cash, 18% planned to increase capex, 15% said they wanted to increase wages and bonuses, 14% planned share repurchases and 8% expected to make new hires. Significantly, companies planning to pay down debt dropped from 65% in 2017 to 26% this year.

A good deal of the extra cash might remain in liquid form. The AFP Corporate Cash Indicators showed a significant number of US companies continuing to grow their cash holdings in the first months of 2018, although the pace slowed down in the second quarter. Global cash piles may start to decline; but uncertainty, including what looks like a trade war, suggests leading companies may need to maintain comfortable cash buffers.

M&A is also heating up. In the US, the TCJA has made M&A more attractive for both buyers and sellers by reducing corporate tax rates and allowing companies, at least temporarily, to immediately expense 100% of depreciable tangible assets acquired. Combined with faster growth in Europe, that helped bring global M&A deals to a record $2.5 trillion in the first half of 2018, according to Thomson Reuters, with health care and media companies the leading targets. High valuations, geopolitical risk and increasing tensions between the US and China, with tariff, regulatory and antitrust ramifications, will make it harder to keep up the pace. But absent major disruptions, the global M&A market is on track to break 2007’s record $4.1 trillion in transactions.

Another potential use for excess liquidity is, of course, stock buybacks. The last time Washington offered a repatriation tax holiday, in 2004, analysts estimated 60% to 90% of the funds went to share repurchases. This time around, Bank of America Merrill Lynch (BofA) estimated that buybacks would be only half of the expected $1.2 trillion of repatriated cash.

That prediction seems to have been off. Buybacks in the Standard & Poor’s 500 hit $189.1 billion in the first quarter, up almost 10% from the previous record, set in the third quarter of 2007. TrimTabs Investment Research estimated first-quarter buybacks at $242 billion and in the second quarter at a staggering $437 billion. Total returns to investors, including both stock repurchases and dividends, in the first three months of the year reached $1 trillion for the first time in history.

Apple has set the most ambitious goal by far. In May the company announced it would buy back $100 billion of its own shares. Apple’s repurchases amounted to $22.8 billion in the first quarter, accounting for 12% of the total for the S&P 500, and another $20 billion in the second. On June 28, Nike announced a $15 billion repurchase plan. In March, drug maker Amgen added $10 billion to its already active $4.4 billion program. And financial-services companies added a total of $112 billion in buyback announcements, with Wells Fargo, JPMorgan Chase and Bank of America announcing plans to repurchase more than $20 billion each.

Workers won’t get much of the tax-cut windfall. American Airlines, Walt Disney, AT&T and a few others announced tax-cut bonuses early this year and some, including Walmart and Wells Fargo, have raised minimum pay for workers or announced extraordinary contributions to retirement plans. But the higher minimum pay at Wells Fargo, for example, will cost the company a mere $78 million, while its buyback plan will cost $20 billion. And even the bank has waffled on whether it’s related to the tax cut or not. Workers at Disney, in the end, never got their raise; it was contingent on accepting management’s contract proposal.

Capex at S&P 500 companies grew 24% in the first quarter, moving even faster than buybacks. But at $166 billion, this is still below the level of share repurchases. And not all sectors are contributing equally. Google’s capex in the first quarter tripled its total for the same period the previous year. Apple recently announced it is raising its capex for 2018 to more than $26 billion, doubling its 2017 figure. The energy sector, too, shows money flowing back into oil projects now that prices have recovered.

Data provided by: Orbis by Bureau van Dijk

Outside the S&P 500, investment activity is positive but less buoyant. According to the US Bureau of Economic Analysis, investment in equipment grew by 6.1% in the first quarter: solid growth, but in line with the last few quarters. Meanwhile, analysts are warning about the artificial boost that buybacks are giving to stock prices.

After all, cash may be king, but it does not always rule wisely.

Once more, technology behemoths top the list of US corporate cash kings. AT&T jumps out of nowhere to 6th place after multiplying its liquid assets by a factor of almost nine in just one year, in preparation for the Time Warner acquisition. Gilead Sciences leaps into 13th place after more than doubling its cash stash. Solid numbers keep General Motors and Coca-Cola in the ranking, losing six positions each despite minor decreases in their absolute liquidity.

Data provided by: Orbis by Bureau van Dijk

Tax havens significantly warp the ranking of Latin America’s top cash hoarders, with five of the top ten companies based in Asia but incorporated in the Cayman Islands. In 1st position, with $24.4 billion in cash, is Petrobras, the state-owned Brazilian oil company. But Beijing-based technology companies Baidu and NetEase come 2nd and 3rd. Ctrip, the travel services company headquartered in Shanghai, takes 4th place. It’s followed by CK Asset Holdings of Hong Kong (formerly Cheung Kong Property Holdings), which managed to stay in 5th despite losing some fuel. Schlumberger, the French oilfield services provider based in Houston but incorporated in Curaçao, takes some steps down the ladder after reducing its cash reserves by 45%; while FEMSA, the Mexican beverage and retail giant, takes a big leap forward by more than doubling its liquid assets.

Data provided by: Orbis by Bureau van Dijk

The ranks of Europe’s most cash-rich companies stayed fairly stable in 2017, with six of last year’s top ten remaining in the top ten. Total keeps 1st place for the fourth year running, as it increased its cash holdings almost 25% to $36.2 billion and widened its lead over BP, with $25.7 billion. Daimler, Shell and Vodafone complete Europe’s Top 5. Big oil has a strong presence in the ranking, accounting for five companies out of 15. The biggest leap, however, was for Christian Dior, which in the aftermath of the Arnault family’s and LVMH’s moves to win complete control over the brand has almost tripled its cash holdings to $12.4 billion.

Data provided by: Orbis by Bureau van Dijk

Expanding the criteria for inclusion had especially big impact on our Central and Eastern Europe ranking. Gazprom, with a $15.7 billion pile of cash, is the undisputable regional leader. Rosneft takes 2nd place despite a big dip in its liquidity, which declined by more than half to $9 billion, in part due to a Trump administration ruling against the company’s joint venture with ExxonMobil.

Energy—particularly oil and gas—completely dominates the Central and Eastern Europe rankings, taking the four first spots and bringing four new companies into the Top 10. Geographically, Russian companies reign, occupying the first seven spots. Turkish Airlines, Turkish steel producer Erdemir and Polish oil refiner and retailer PKN Orlen—all state-owned—are the only non-Russian companies making the list.

Data provided by: Orbis by Bureau van Dijk

With $71.6 billion of cash in its accounts, state-owned China Mobile takes 1st place in Asia-Pacific this year. Following in 2nd is Toyota, with a stash of $53.9 billion, while China State Construction Engineering takes over 3rd place despite an 8% decrease in its cash holdings to $42.7 billion. The biggest improvement was recorded by Central Japan Railway, which significantly increased its cash reserves in preparation for construction of the Chuo Shinkansen line.

Data provided by: Orbis by Bureau van Dijk

In the Middle East ranking, a few state-owned corporations appear this year for the first time. Saudi Basic Industries Corporation (SABIC) increased its cash stash by 47% in 2017 and lands on top with $15.7 billion. Other companies report much more modest activity. Two telecoms come in 2nd and 4th: Emirates Etisalat and Qatari Ooredoo. In 3rd and 5th places are two real estate developers, Emirati Emaar Properties and Aldar Properties. The only companies in the top 10 without significant government ownership are Check Point Software, the Israeli cybersecurity company, which dropped from 3rd to 7th place despite keeping its cash stash almost unchanged; and Woqod, the Qatari fuel retailer, which fell from 4th to 8th despite an increase of almost 38% to $1.2 billion in cash.

Data provided by: Orbis by Bureau van Dijk

The 10 richest African companies are diverse by sector, but very concentrated geographically; all but one are based in South Africa. After more than doubling its cash pile to $4 billion, internet and media group Naspers takes 1st place. Sasol keeps the second spot, despite reducing its liquidity by more than a third to $2.3 billion. MTN, the global mobile telecommunications company, takes over third position with $1.9 billion. The sole non-South-African company in the regional top 10, Nigeria’s Dangote Cement, lands in 8th place after increasing its cash reserves by 45% to $550 million.