China Says Funds Can Go To Australia
Sydney Morning Herald
Wednesday June 11, 2008
THE financial services industry has hailed a decision by the Chinese Government to add Australia to a list of approved investment destinations for the country's financial houses.
The chief executive at the Investment and Financial Services Association, Richard Gilbert, said the measure would be a fillip for the funds management industry, giving it potential access to a multibillion-dollar pool of finance. "The size of our economy is small compared to China's and a small amount of their money means a lot to the Australian economy," he said. Chinese funds under management have risen from $US119 billion at the end of 2006 to $US455 billion at the end of 2007, and could hit $US730 billion by the end of this year. But the vast bulk of the money is not permitted to leave the country. Chinese banks, insurance companies and fund managers must obtain quotas to invest overseas, in partnership with foreign money managers. To date, Beijing has issued about $US43 billion worth of overseas quotas. Yesterday's measure adds Australia to a small list of approved investment destinations under the Qualified Domestic Institutional Investor Scheme. It does not relate to equity investments in overseas firms by Chinese Government entities, such as Sinosteel's pitch for the Australian iron ore company Midwest."This puts us on the radar," Mr Gilbert said, predicting that Chinese authorities would allow a greater volume of funds to leave the country in the future. The Prime Minister, Kevin Rudd, is believed to have raised Australia's inclusion on the list while in Beijing. "This initiative will also add liquidity to the Australian capital market and open the way for broader investment choices for Chinese investors," the Treasurer, Wayne Swan, said in Beijing yesterday.
© 2008 Sydney Morning Herald
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