Luxembourg granted RQFII quota
The Peoples Bank of China has granted Luxembourg a RMB Qualified Foreign Institutional Investor (RQFII) scheme to enable Luxembourg's global investor base to directly invest in Mainland China.
Major international and Chinese fund promoters had already set up RQFII funds through Luxembourg domiciled vehicles, using other jurisdictions' quotas. However now fund managers will be able to use the RQFII scheme directly to invest up to RMB50bn on the Chinese capital market.
“The granting of the RQFII quota again demonstrates China’s recognition of the Luxembourg financial centre as one of Europe’s main hubs for international renminbi business. We are proud to play such a significant role in the process of the internationalisation of the renminbi,” said Luxembourg Minister of Finance, Pierre Gramegna.
The RQFII scheme is particularly useful for fund managers who use Luxembourg as a platform for cross-border distribution.
Launched in 2011, the RQFII scheme has been expanded to other jurisdictions outside of Hong Kong since 2013, allowing offshore RMB to be reinvested into the Mainland securities market.
In H2 2014, Luxembourg ranked first in Europe when it comes to RMB deposits (RMB61.5bn), loans (RMB61.1bn) and RMB in investment funds (RMB296.3bn).
The Luxembourg Stock Exchange is also the exchange with most dim sum bonds listed in Europe (45 in H2 2014). With a market share of 12% of global dim sum bond listings, it ranks third behind Hong Kong and Singapore.
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