Shanghai Stock Exchange and Singapore Exchange signed a memorandum of cooperation

On the evening of May 24, according to the announcement made by the Shanghai Stock Exchange (hereinafter referred to as the SSE), the SSE and the Singapore Exchange (hereinafter referred to as the Singapore Stock Exchange) officially signed a memorandum of understanding on ETF product interoperability cooperation, marking a new step in China Singapore capital market product cooperation and a new step in cross-border product connectivity business.

According to the Memorandum of Understanding on Cooperation, the Shanghai and Singapore exchanges will focus on strengthening sincere cooperation in the exchange of ETF products, support cooperation between Chinese and Singapore market institutions in developing ETF exchange products, and provide diversified cross-border investment options for investors from both countries.

Assist in building a new development pattern of China ASEAN capital market interconnection and cooperation

The Shanghai Stock Exchange announced that it has always maintained a good relationship with the New Exchange. Since the signing of the Memorandum of Understanding on Cooperation in 2004, the two sides have been closely engaged in exchanges and cooperation in areas such as high-level visits, personnel exchanges, and information exchange. The signing of the Memorandum of Understanding on ETF product exchange and cooperation this time is an active exploration of a new way of cooperation between the two sides in the field of products. It will further deepen the relationship between the two institutions and promote the upgrading and coordinated development of cross-border cooperation in the China Singapore capital market. On the basis of drawing on the experience of mature cross-border ETF exchange models, Shanghai and Singapore will actively explore the launch of each other's market advantage ETF products, improve their respective market opening up product systems, and meet the growing cross-border investment needs of investors in both countries.

The announcement from the Singapore Stock Exchange stated that under the agreement, the Singapore Stock Exchange and the Shanghai Stock Exchange will jointly develop and promote the ETF markets of the two countries through the master slave fund architecture model. The announcement also stated that the latest cooperation with the Shanghai Stock Exchange has linked two rapidly developing ETF markets in Asia and expanded the scope of ETF linked fund listings between China and Singapore. This connection has also promoted more cooperation opportunities between issuers in the two markets and increased investors' investment choices.

Loh Boon Chye, CEO of the New Exchange Group, said, "The New Exchange Group has a long-term partnership with the Shanghai Stock Exchange, and we are pleased to establish closer ties with the Shanghai Stock Exchange and explore new areas of cooperation. We recognize that by leveraging the unique advantages of both markets, we can unlock more exciting opportunities for investors

Cai Jianchun, General Manager of the Shanghai Stock Exchange, also pointed out that with the signing of the Memorandum of Understanding, the Shanghai Stock Exchange and the Singapore Stock Exchange Group will continue to promote cross-border cooperation between China and Singapore, and develop more investment in selected ETF connection products to meet the growing demand for cross-border opportunities in the two markets.

According to the official WeChat of Shanghai Stock Exchange, in the next step, Shanghai Stock Exchange will, in accordance with the unified deployment of the CSRC, unswervingly implement the strategic deployment made by the Twentieth National Congress of the Communist Party of China to promote high-level opening up, steadily expand the rules, regulations, management, standards and other institutional opening, further optimize and improve the connectivity mechanism, and actively serve the "the Belt and Road" and other major national strategies, We will continue to deepen practical cooperation with the capital markets of ASEAN and other countries along the "the Belt and Road", and help build a new development pattern of mutual promotion and integration of China ASEAN capital markets under the domestic and international "double cycle" strategy.

Accelerated pace of connectivity in the China Singapore capital market

As one of the first foreign-funded exchanges to establish a representative office and conduct business in China, the Singapore Stock Exchange has been focusing on developing the Chinese market in recent years, and the pace of capital market cooperation between China and Singapore has also been continuously accelerating.

At the end of December 2021, the Shenzhen Stock Exchange (hereinafter referred to as the Shenzhen Stock Exchange) and the New Stock Exchange signed a memorandum of understanding (hereinafter referred to as the "Memorandum") on cooperation in the exchange of ETF products between Shenzhen and Singapore, further deepening cooperation between the two sides in the exchange of ETF products.

On November 14, 2022, UOBAM Ping An ChiNext ETF, a subsidiary of Dahua Asset Management in Singapore, was officially listed on the Singapore Stock Exchange, becoming the first ETF product to track the domestic A-share index on the Singapore Stock Exchange, providing investors on the Singapore Stock Exchange with a channel to enter the Chinese ChiNext market that had previously been relatively limited.

On December 30 of the same year, two ETF exchange products from the Shenzhen Stock Exchange (hereinafter referred to as the Shenzhen Stock Exchange) and the Singapore Stock Exchange were successfully listed simultaneously in Shenzhen and Singapore, with a total asset management scale (AUM) exceeding S $270 million (approximately RMB 1.41 billion). These two ETFs are the Southern Dongying China Securities Science and Technology Innovation Board and the ChiNext 50 Index ETF listed on the New Stock Exchange, as well as the Southern Fund Southern Dongying Galaxy Lianchang FTSE Asia Pacific Low Carbon Index ETF listed on the Shenzhen Stock Exchange.

According to data from the Singapore Stock Exchange, with the launch of these three ETFs, the daily trading volume of China stock ETFs on the Singapore Stock Exchange increased by more than 50% in the first quarter of 2023, reflecting the growing demand from investors for China stock ETFs. As of April 2023, Singapore's demand for China and Singapore stock ETFs remains strong, with a total assets under management (AUM) of S $2.9 billion (approximately RMB 15.1 billion).

The demand for China related ETFs, REITs, stock indices, commodities, and foreign exchange derivatives in the Singapore market is also increasing. According to data from the Singapore Stock Exchange, as of the end of 2022, China's equity and fixed income ETFs have increased their market share in Singapore's ETF market from 4% three years ago to the current 20%. At the same time, the total asset size of the New Exchange ETF has doubled in the past three years.

The interconnection between the Pan ASEAN region is becoming increasingly close

Singapore is one of the most dynamic economies in Southeast Asia and even the world, and the capital market cooperation between the Singapore Stock Exchange and the Pan ASEAN region has become increasingly close in recent years.

On May 23, the Singapore Stock Exchange announced that it will launch a new product under the Thailand Singapore Depositary Receipts Interconnection Mechanism - Singapore Depositary Receipts (SDR1) on May 30, 2023, and will sign a Memorandum of Understanding (MOU) to showcase the partnership between the Singapore Stock Exchange Group and the Thai Stock Exchange (SET, hereinafter referred to as the "Thai Stock Exchange") in the field of depositary receipts interconnection mechanism.

It is worth noting that this is the first exchange level cooperation on depositary receipts in the ASEAN region and an important step towards strengthening connectivity in the region. This cooperation leverages the advantages of two well-known exchanges to facilitate more joint investment and business opportunities for both parties and market participants.

The announcement states that the Singapore Stock Exchange Group has introduced Singapore Depositary Receipts, providing a more convenient way for Singaporean investors to invest in the regional market. Investors can trade Singapore Depositary Receipts through local brokers, gain more exposure to overseas listed securities, and enjoy more trading convenience through the use of commonly used platforms. These Singapore Depositary Receipts will be traded in Singapore dollars on the Singapore Stock Exchange securities market during local trading hours.

The announcement revealed that the first batch of Singapore Depositary Receipts were issued by Huili Securities and represent the beneficial ownership of the benchmark stocks of the SET50 Index, including Thailand Airport (AOT), CP All of Zhengda Group, and PTT Exploration and Production (PTTEP).