Wednesday 13 December 2017

Massive €6.8bn investment quota grant from China to Ireland 'key milestone in economic relations'

Ireland has now become only the 17th jurisdiction outside of China granted an RQFII quota REUTERS/Tyrone Siu
Ireland has now become only the 17th jurisdiction outside of China granted an RQFII quota REUTERS/Tyrone Siu
Louise Kelly

Louise Kelly

Ireland has been granted an investment quota of 50 billion renminbi (€6.8bn) by the People's Bank of China under the country's Renminbi Qualified Foreign Institutional Investor (RQFII) programme.

The quota will allow Irish-domiciled financial institutions to invest in China’s domestic bond and equity markets using China’s own currency.

Irish financial service providers will now also be able to offer this additional service to European markets and could increase Ireland’s attractiveness for foreign direct investment.

Ireland has now become only the 17th jurisdiction outside of China granted an RQFII quota since the programme was launched in 2011.

RQFII allows overseas institutions to use China’s yuan currency, also known as the renminbi (RMB), raised offshore to invest directly in mainland China, including shares, bonds and money market investments.

“The fact the People’s Bank of China has generously granted Ireland this quota highlights the important role Ireland plays in international financial services," Minister for Finance Michael Noonan said.

"We are committed to growing real jobs in this important sector and this quota is a key contributor to ensuring the continued success of the IFS2020 Strategy.”

Minister of State for Financial Services Eoghan Murphy said that the quota "is an important step in building closer bilateral cooperation with China in financial services".

"It will improve Ireland’s funds services offering and our status as a major financial services centre.  While given the uncertainty arising from the Brexit vote it has become more of an imperative for Ireland to continually improve the conditions to attract new investment and job creation in this sector.”

Further enhancing Irish funds’ ability to access Chinese mainland markets, the Central Bank have also advised that they will now begin accepting applications for investment through Shenzhen Connect.

This is the latest addition to the existing Hong-Kong-Shanghai Stock Connect which Irish funds were granted access to in 2015.

Announcement the grant on Wednesday morning, Central Bank Governor Philip Lane said the decision "represents an important step in further strengthening bilateral financial cooperation between the two jurisdictions". 

"Initiatives such as this further global economic integration and may therefore result in potential macroeconomic gains for the jurisdictions concerned."

The representative body for the cross-border investment funds industry in Ireland, Irish Funds, has also welcomed the announcement that "recognises Ireland’s position as a leading cross-border funds centre".

“We are delighted the RQFII Quota has been granted - it is testament to the hard work of both the Chinese and Irish authorities and something we have been strong advocates for on behalf of our members," Chief Executive of Irish Funds Pat Lardner said.

"We believe that multiple access points to the Chinese securities markets via RQFII and Stock Connect provide a range of options for the hundreds of investment managers who already use Ireland and the many more we believe will. 

"As the home of 4.9pc of Global fund assets and 14.6pc of European fund assets Ireland will continue to provide vital connections between managers and investors from around the globe.”

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