19 April 2019

UPDATE: UK said to get 80 bln yuan RQFII quota

(Recasts headline and lead, adds analyst comments)

China and Britain on Tuesday signed agreements on 80 billion yuan (US$13.1 billion) of quotas under the renminbi qualified foreign institutional investor (RQFII) scheme which allows offshore yuan to be invested in Chinese capital markets, Bloomberg News reported.

The two sides also agreed to have direct trading of their currencies after a meeting between Chinese Vice Premier Ma Kai {馬凱} and British Chancellor of the Exchequer George Osborne at the fifth Sino-UK economic and financial dialogue in Beijing.

“Obviously, China isn’t just targeting Asia in the course of renminbi internationalization. It is taking Europe as a partner to help it reach out to other regions given the time-zone difference,” Frances Cheung, senior fixed income strategist at Credit Agricole CIB, said by phone.

A wave of breakthroughs is sweeping across Europe as nations seek to sidestep the US dollar amid rising risks from the US fiscal crisis.

Frankfurt’s financial sector unveiled plans earlier this year to transform the German financial center into an offshore yuan hub. The European Central Bank and its Chinese counterpart signed a 350 billion yuan currency swap deal on Oct. 9.

The latest RQFII expansion will be on top of the 270 billion yuan already allocated to Hong Kong.

Tuesday’s agreement is “an opportunity for bonds to be issued and money to be raised”, Osborne said. “A great nation like China should have a great global currency.”

Also, Britain will make it easier for Chinese banks to set up branches in London, another step toward turning the country into a financial investment hub for Asia’s biggest economy, news website reported, citing Osborne.

China and Britain began the annual high-level discussions in 2008.

Ma said he expects Britain to support Chinese lenders in opening wholesale branches and strengthen London’s infrastructure for its offshore renminbi market. The two sides are aiming for US$100 billion in bilateral trade in 2015, the report said.

– Contact the reporter at [email protected]


First posted: 15:23

EJ Insight reporter

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