Total stocks of PI assets in 2024 amounted to €68,958.7 million, increased from €62,333.7 million in 2023, according to data from the Portfolio Investment Report for 2024, as published by the Statistics Department of the Central Bank of Cyprus (CBC).
According to CBC, this rise is reflected in the increase recorded in equity and investment fund shares as well as in debt securities investments made by residents abroad.
Debt securities assets totalled €21,482.5 million in 2024, representing 31% of total portfolio assets compared with 29% in 2023, and equity and investment fund shares totalled €47,476.2 million in assets in 2024, accounting for 69% of total portfolio assets, compared to 71% in 2023.
As regards debt securities holdings, the vast majority is undertaken with long-term maturity (89% in 2024) with main holders being the “MFIs” and the “Other Sectors”. Specifically, in 2024, the long-term holdings of the ”MFIs” and “Other Sectors” increased by €1,973.2 million and €1,046.4 million, respectively. The rise in equity and investment fund shares in 2024 was mainly due to the increase recorded in the holdings of the “Other Sectors” by €2,634.4 million. In particular, this was attributed to the holdings in listed shares by “non-financial corporations” and “captive financial institutions.”
The main investment destinations related to PI assets, for the year 2024, are Russia, the United States, Ireland, Luxembourg and Kazakhstan, which accounted for approximately 55% of the total stock. The number of partner countries for the remaining 45% is large and consists of 141 countries. According to the data, for Russia and the United States debt securities made up the majority of the total portfolio, while for Luxemburg, Ireland and Kazakhstan the majority of PI assets relates to equity and investment fund shares.
The main counterpart sector in which resident investors invested in 2024 was “Other Sectors”. More specifically, within the group of “Other Sectors”, resident investors preferred the sub-sectors of “Other financial corporations excluding financial vehicle corporations” which accounted for 34% of the total PI assets in 2024, followed by “nonfinancial institutions” with 22% of total PI assets. General Government also constitutes another major counterpart sector reaching up to 13% of total PI assets.
Regarding PI liabilities stocks, CBC notes that total PI liabilities stocks in 2024 amounted to €18,303.5 million, decreasing from €19,836.4 million in 2023. The fall reflects a decrease in non-residents holdings in long-term debt securities issued by Cypriot residents of the “Other Sectors” and “General Government The majority of PI liabilities is issued by residents in the category of “Other Sectors” for 2024 and 2023 although PI liabilities of the “General Government” also constitute a large part of the total stock.
The main component for PI liabilities was equity and investment fund shares but as shown in Table 3, debt securities also constitute a significant part of the total PI liabilities. Specifically, debt securities held by non-residents totalled €8,012.9 million in 2024 and €10,224.2 million in 2023, representing 44% and 52% of the total portfolio liabilities in 2024 and 2023 respectively, and equity and investment fund shares totalled €10,290.6 million and €9,612.2 million in 2024 and 2023 respectively, accounting for 56% and 48% of the total portfolio liabilities.
Impact of SPEs on PI statistics
“Special Purpose Entities” (SPEs) are considered residents of their country of registration/incorporation, for statistical purposes, albeit their transactions and stocks may, in their entirely, be “cross border”. However, CBC notes that their number and the complexity of their structure have increased considerably in recent years, contributing to the distortion of the main macroeconomic statistics, since Cyprus hosts a large number of SPEs whose assets and liabilities strongly influence, amongst others, the PI statistics of the country, even though their interaction with the domestic economy is limited.
The majority of SPEs with PI instruments are used as financing vehicles to channel funds within a global group on behalf of a non-resident parent company.
CBC conducts a separate analysis, where it treats SPEs as non-residents so as to remove the impact those entities have on the overall PI statistics. When treating SPEs as non-residents, total PI assets experienced a significant decrease by approximately 51% for 2024 and 56% for 2023 compared to when treating SPEs as residents. The highest impact is in equity and investment fund shares, which fall to €13,575.3 million compared with €47,476.2 million when treating SPEs as residents.
Total PI liabilities are also impacted from SPEs. In particular, they fall to €10,327.9 million in 2024 when treating SPEs as nonresidents as opposed to total liabilities of €18,303.5 million when treating SPEs as residents. For the years 2024 and 2023 the greatest impact of SPEs is mostly seen in the category of equity and investment fund shares, with a drop of 276% and 265%, respectively.
(Source: CNA)
