Irish funds set to grow as Ireland and China agree landmark €7bn deal

Ireland’s status as a global financial centre has been boosted thanks to a new €7bn investment deal with China according to Irish Funds, the representative body for the cross-border investment funds industry in Ireland.

Irish Funds said that it has welcomed the announcement by the People’s Bank of China and the Irish authorities that Ireland has been granted a RMB 50bn (€7bn) quota under the RQFII Scheme that allows Irish fund’s investment into Chinese markets.

In a statement reacting to the announcement of the deal, Irish Funds said that it believes that this “important announcement” recognises Ireland’s position as a cross-border funds centre. The deal is of particular relevance as it comes very quickly after confirmation that the Central Bank of Ireland is in a position to accept applications from Irish domiciled UCITS and AIFs to invest through the Shenzhen-Hong Kong Stock Connect (Shenzhen Connect) programme, it said.

With the UK’s position as the Eurozone’s number one financial centre under threat due to Brexit, Irish Funds believes that it is a strategically important and timely development given the growing relevance of holdings in Chinese securities by global fund managers. Ireland’s position as the third largest global funds centre and as the European location of choice for ETFs could also be bolstered by the announcement in advance of possible index inclusions for Chinese shares.

Irish domiciled funds

As a result of the deal, eligible investors will be granted licenses as part of the RQFII quota set at RMB 50 billion (approximately €7bn at current exchange rates), which will allow Irish domiciled funds to purchase securities in local Chinese markets.

Irish fund managers are now able to pally for investment through Shenzhen Connect, the latest Chinese stock market outlet, alongside the existing Hong-Kong-Shanghai Stock Connect which Irish funds were granted access to in 2015.

Irish Funds belies that these developments will attract both Chinese and international managers to establish funds in Ireland to provide investment access the Chinese market for global investors. They also mark a strengthening of the financial services links between Ireland and China, it said.

Testament

Pat Lardner, chief executive of Irish Funds said that the granting of the RQFII Quota 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”

“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,” said Lardner.  “As the home of 4.9% of Global fund assets and 14.6% of European fund assets, Ireland will continue to provide vital connections between managers and investors from around the globe.”

ABOUT THE AUTHOR
Gary Robinson
Deputy Editor, International Investment and Head of Video at Open Door Media Publishing. A fully qualified journalist and filmmaker with more than 20 years' financial services experience, both as journalist and originally as an IFA.

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