Many of the home bias investment strategies for 2019 are at best hedging or fine-tuning existing assets and does not represent enough capital flow to sustain valuations in tier one or tier two markets for no more than a year or two. With US cross border transactions down, Italy, Germany, and France are in recession. Rising interest rates, difficult underwritten standards, deflating shadow debt funds, flattening the yield curve, Brexit, China divestiture, oversupply of class A apartments, flattening rents and $250 billion of private equity earmark for US/.Europe unspent will not support the home bias valuations in 2020
For 2019-2022 the direct investment global portfolio manager is the focus is on diversification, capital flow momentum in countries with integrated financial systems and policies that curb risk. As we know before the financial crisis of 2008 outbound capital was at elevated levels, however, in the following years, there were both frictions and signs of recovery for foreign direct investment into emerging economies. Elevated geopolitical risks, financial disintegration and policy uncertainty for investors have had an impact on the scale and contours of the FDI recovery in 2017. Political developments such as the United States abandoning the Trans-Pacific Partnership and populist elections in mature economies, even tax reform on large multinational enterprises(MNE)which has to reduce retained earnings held in overseas affiliates. In a 2017 survey of multi-national executives concerning FDI in 2018 see the upturn in FDI to emerging GDP markets. see chart below.