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China and Singapore stock exchanges to develop cross-border ETF link

People walk through the headquarters of Singapore Exchange Ltd. (SGX) in Singapore on Wednesday, February 17, 2021.

Lauryn Ishak | Bloomberg | Getty Images

The Shenzhen Chinese Stock Exchange and the Singapore Stock Exchange (SGX) have committed to establishing a cross-border link for exchange-traded funds (ETFs), the exchanges said, a move to open up a wider range of options. investment on both sides.

Under a Memorandum of Understanding (MoU) for the link, the two exchanges will jointly develop and promote ETF markets in Singapore and China through cross-border investments, the exchanges said in separate statements on Tuesday evening.

The memorandum of understanding represents the latest step taken by China to open up its capital markets. Earlier this month, the China and Hong Kong stock exchanges agreed to add ETFs to their equity connection programs, and the Chinese securities regulator announced plans to expand the Shanghai-London Stock Connect to include the capital markets in Germany and Switzerland.

“The strong demand for ETFs in Asia underscores the region’s growing role as a global ETF hub and we are excited about the many opportunities this partnership could bring,” said Loh Boon Chye, CEO of SGX, in the press release.

Sha Yan, chairman and chief executive officer of the Shenzhen Stock Exchange, said the deal will provide investors in China and Singapore with diversified cross-border opportunities.

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At the end of November, ETFs listed in Singapore exceeded S $ 12 billion ($ 8.86 billion) in assets, up nearly 50% from the previous year, SGX reported. The Shenzhen Stock Exchange currently lists 212 ETFs with a combined market capitalization of $ 39 billion.