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The level of foreign investment in Australia at 30 June 2002 was $844.4b, an increase of 65% on the position as at 30 June 1997. Portfolio investment was $465.7b (55% of total foreign investment in Australia), direct investment was $210.9b (25%), financial derivatives was $30.9b (4%) and other investment was $136.8b (16%).
Foreign investment in Australia generally refers to the stock of Australian liabilities owed to non-residents; and to the financial transactions and other changes which change this stock. It is broken down into direct, portfolio, financial derivatives and other investment.
Direct investment is a category of international investment that reflects the objective of obtaining a long-term interest by a resident in one economy in an enterprise in another economy, and implies a significant degree of influence by the investor on the management of the enterprise. A direct investment relationship is generally deemed to be established when an investor, who is a resident in one economy, holds 10% or more of the ordinary shares or voting stock of an enterprise in another economy. All financial transactions and positions between entities in a direct investment relationship (excluding certain inter-bank positions) are classified to direct investment.
The portfolio investment category covers investment in equity and debt securities (other than direct investment), financial derivatives (such as currency and interest rate swaps) are secondary securities linked to specific financial instruments, indicators or commodities, while other investment covers the remaining kinds of investments such as trade credits, loans, currency and deposits.