Investments flowed out of the euro zone in March as residents bought foreign bonds and companies increased loans to foreign affiliates, the European Central Bank said today.
The ECB said there was a net €11.5 billion outflow in combined portfolio and direct investment in March, from a revised inflow of €16.8 billion in February.
Direct investment was particularly weak, recording an outflow of €8.8 billion, largely driven by an €8.6 billion increase in lending by euro area companies to foreign affiliates.
The ECB said euro area residents also bought €23.5 billion worth of foreign bonds and notes, partly offset by a net inflow in equity investments.
Kit Juckes, chief market strategist at RBS Financial Markets, said the outflow in debt probably reflected low bond yields in Europe, particularly compared to the United States.
Rob Carnell from ING Financial Markets said the euro might have had an impact on weaker income flows. "This is going back to March when the euro had been strengthening, so when you are translating your overseas profits back in to euro, you get less euro for that," he said.
"So that's probably reflecting some of the currency movements that took place earlier on in the year. It probably also reflects that we have had some sort of a soft patch occurring overseas."