Shanghai and Singapore bourses plan ETF Connect

Shanghai Stock Exchange (SSE) and Singapore Exchange (SGX) have signed a memorandum of understanding to establish a scheme linking their respective ETF markets.

Under the agreement, SSE and SGX will jointly develop and promote the ETF markets in Shanghai and Singapore through the listing of so-called ‘feeder’ ETFs which link locally listed ETFs to ones listed on the other exchange.

The scheme will allow ETF issuers in both countries to tap into cross-border capital flows, while also providing investors on both exchanges with a wider range of investment options.

It builds upon a similar scheme that was established last year between SGX and China’s Shenzhen Stock Exchange (SZSE). Three feeder ETFs providing Chinese equity exposures – the CSOP CSI Star ETF, CSOP ChiNext 50 Index ETF, and UOBAM Ping An ChiNext ETF – have thus far come to market in Singapore as part of that scheme.

According to SGX, reflecting a growing appetite for Chinese equities exposure, daily turnover for these ETFs has grown by more than 50% in the first quarter of 2023.

China has also established ETF Connect schemes with Japan, Hong Kong, and Korea as the country moves to increasingly open up to international investors.

Loh Boon Chye, CEO of SGX Group, said: “SGX and SSE have enjoyed a long-standing relationship and we are pleased to forge closer ties with SSE to explore new areas of cooperation. We recognize that by leveraging the unique propositions of both markets, we can unlock the potential for more exciting opportunities for investors.”

Cai Jianchun, President, SSE, added: “With the signing of this memorandum of understanding, SSE and SGX will continue to promote cross-border cooperation between China and Singapore and develop more connectivity products investing in selected ETFs to meet the growing demand for cross-border opportunities between both markets.”