A financial delegation from Luxembourg led by Luxembourg Minister of Finance Pierre Gramegna is underway in Asia stopping in South Korea, Japan, at the Asian Financial Forum in Hong Kong, as well as in Beijing to promote Luxembourg’s expertise in international finance. The tour also includes Taipei, Taiwan where experts from the fund industry highlighted Luxembourg’s expertise in the cross-border distribution of investment funds in a seminar organised by the Luxembourg Fund Association (ALFI).
Today, more than 75% of UCITS distributed worldwide are domiciled in Luxembourg, so are roughly 60% of all UCITS distributed in Japan. Asia is Luxembourg’s top distribution market for UCITS after Europe. The UCITS brand does not only stand for Luxembourg, but also for a stable, high quality, well-regulated investment product with significant levels of investor protection. As a result, many asset managers are establishing UCITS funds with a clearly defined global distribution strategy.
The AIFMD, Alternative Investment Fund Managers Directive, and its potential for foreign investors was another topic highlighted during the Alfi seminars. The AIFMD will open and unify a market of 28 EU member states for alternative managers and is pushing the European asset management industry towards a model of regulation in exchange for a passport. Replicating its success in UCITS funds, Luxembourg is Europe’s main alternative hub.
Being Europe’s prime private banking destination, Luxembourg wealth managers have longstanding experience in providing tailor-made solutions in complex cross-border situations and a multi-jurisdictional environment. For many international banks, Luxembourg is the global hub to enter the European market. Three Chinese banks, Bank of China, ICBC and China Construction Bank have their European headquarters in Luxembourg, from where they operate an extensive network. Three more, Agricultural Bank of China, China Merchants Bank and Bank of Communications will follow in their footsteps this year. Amongst the 148 banks from 27 countries established in Luxembourg are also five Japanese banks.
The Luxembourg Stock Exchange (LuxSE) is the largest platform for listing international bonds in Europe and has the highest number of RMB bond listings. It plays a particularly important role in the internationalisation of the renminbi. 14% of Dim Sum bonds listed worldwide are listed on the LuxSE, following the Singapore exchange with 22% and the Hong Kong exchange with 44% of listings.
The interest of European companies to tap into Mainland China is huge, so is the appetite for Chinese companies to invest into Europe. A Dim Sum bond offers both advantages for the issuer and the investor: It is a diversified and competitive source of financing and adds to an investors’ portfolio diversification.
Another promising sector of Luxembourg that was pointed out is the FinTech. Bringing together two industries, financial services and technology, Luxembourg is with its state-of-the-art infrastructure an attractive location for companies active in this field.