The Singapore Exchange (SGX)S68 and Shanghai Stock Exchange (SSE) have signed a memorandum of understanding (MoU) to launch an exchange-traded fund (ETF) link, further strengthening the connectivity between Singapore and China.
Under this agreement, the SGX and SSE will jointly develop and promote the ETF markets in both countries through a master-feeder fund model. This latest collaboration bridges the two rapidly growing ETF markets in Asia, aside from extending the range of ETFs available for listing of feeder funds between China and Singapore.
The SGX-SSE link also facilitates greater collaboration opportunities between issuers in both markets, enhancing investment options for investors.
The new link builds upon the successful listing of three ETFs in 2022 under the ETF Product Link with the Shenzhen Stock Exchange (SZSE). This reflects the growing appetite for China equities ETFs, as the daily turnover for such products grew more than 50% in the first quarter of 2023, following the launch of CSOP CSI Star and ChiNext 50 Index ETF as well as the UOBAM Ping An ChiNext ETF.
The demand for China and Singapore equities ETFs in Singapore remains strong with a combined asset under management of $2.9 billion as at April.
“We recognise that by leveraging the unique propositions of both markets, we can unlock the potential of more exciting opportunities for investors,” says SGX Group CEO Loh Boon Chye.
"With the signing of the MoU, the SSE and SGX will continue to promote cross border cooperation between China and Singapore," says SSE president Cai Jianchun. He adds that both parties will develop more connectivity products investing in selected ETFs to meet the growing demand for cross-border opportunities between both markets.
The Monetary Authority of Singapore (MAS) and the China Securities Regulatory Commission (CSRC) witnessed the signing of the MoU. This followed the regulators’ annual supervisory roundtable, where both parties exchanged views on supervisory approaches aside from discussing initiatives to deepen capital markets connectivity between Singapore and China.
The MAS and the CSRC also discussed China’s IPO registration system and capital markets structural reform; Singapore’s supervisory approach for fund management and investor protection; as well as the regulation of derivatives markets in both countries.
