Singapore and Shanghai ink deals to boost capital market ties

18 April 2017   Category: News, Asia, China, Singapore   By Asia Asset Management

Financial institutions from Singapore and Shanghai have signed several agreements to deepen their bilateral collaboration and take it to “new heights”.

This includes a deal between Shanghai Pudong Development Bank and Singapore Exchange to enhance capital market cooperation and encourage more Chinese companies to tap Singapore’s capital markets.

It was one of nine memorandums of understanding signed at the annual Singapore-Shanghai Financial Forum held by the Monetary Authority of Singapore (MAS), and Shanghai Municipal Financial Services Office (SFSO) in Singapore last week (April 12).

Forum participants “discussed deepening financial linkages between Singapore and Shanghai, to anchor both cities as leading financial centres”, according to a joint statement from MAS and SFSO. 

MAS’s Deputy Managing Director Jacqueline Loh said in a speech at the forum that “China’s future direction in financial sector deepening and liberalisation is clear,” noting that China’s President Xi Jinping had announced at the G20 Summit last year that his country would continue with efforts to make the RMB an international currency and further internationalise the financial sector.

In the speech posted on MAS’s website, Ms. Loh says Singapore would be a “natural partner” to Shanghai in the Belt and Road Initiative (BRI) – a key trans-national initiative in China – “in realising this vision to promote trade and investment flows between China and the ASEAN (Association of Southeast Asian Nations) region.”

“Shanghai and Singapore financial institutions can work together to encourage Chinese corporates to leverage the scheme and access direct financing for their BRI projects overseas,” she adds.

Last November, MAS introduced the Asian Bond Grant Scheme for first-time Asian debt issuers, which offsets up to 50% of issuance costs.

Technology is another area where Ms. Loh sees opportunities for cooperation: “There is great scope for Shanghai and Singapore to harness technology together in a purposeful way, while ensuring appropriate and responsive regulatory frameworks to safeguard against possible new risks.”

Jin Xingming, deputy secretary general of the Shanghai Municipal Government, shares Ms. Loh’s views. “Shanghai and Singapore can deepen cooperation in the three areas of RMB internationalisation, developing the Belt and Road Initiative and strengthening fintech [financial technology] capabilities,” he says in the joint statement.

SFSO Director General Zheng Yang adds that Shanghai is willing to work with Singapore to foster “multi-level, multi-dimensional and practical cooperation, to further the development of the New Silk Road Economic Belt and the 21st Century Maritime Silk Road.”