LONDON, Jan. 21 (People’s Daily Online) -- Emerging markets will increasingly turn to the UK as an institutional investment hub as they diversify their portfolios and undertake regulatory reform that increase outward capital flows, according to a new report of the City of London Corporation.

There will be three major sources of opportunity for the UK to attract further institutional investment as emerging markets continue to develop: sovereign wealth funds and state-managed pension funds, asset management, and portfolio investment flows.

The report notes that China is leading in terms of both volume and liberalisation, particularly in relation to the sophistication of its two main sovereign wealth funds. In interviews, industry figures highlighted the UK’s legal system and transparent regulations with investor protection being considered by Chinese investors as major strengths. This upward trend in capital flows is expected to be sustained by China’s liberalisation of the capital account, the internationalisation of the renminbi and increasingly strong demand for a range of investment options.

Mark Boleat, Policy Chairman at the City of London Corporation, said: “We are increasingly encouraged by developments over the past decade in domestic financial markets in the BRIC countries, although as their own policymakers recognise it is clear that more reforms are needed. As the BRIC nations continue to develop their domestic markets, it is natural that institutional investors will seek a broader portfolio of investment options. The UK has unique experience and expertise that make it a stable and secure destination for outward capital flows. We will continue to work with these markets to support their plans for development and explore sectors where partnership could be mutually beneficial.”