Hong Kong and Singapore bourses agree to co-operate on yuan business

Deal between former rivals expected to lead to new products and services on both exchanges

PUBLISHED : Wednesday, 04 December, 2013, 11:40pm
UPDATED : Thursday, 05 December, 2013, 11:37am

The Hong Kong and Singapore bourses, rivals for decades, have agreed to co-operate on yuan business.

The partnership, coming after many years of fierce competition for new listings and products, surprised market observers.

Singapore, along with other overseas markets, including London, Tokyo, Paris and Sydney, had previously sought to challenge Hong Kong's role as the leading offshore centre for dealing yuan.

Hong Kong Exchanges and Clearing (HKEx) chief executive Charles Li Xiaojia and Singapore Exchange (SGX) chief executive Magnus Boecker signed a memorandum of understanding in Singapore yesterday in which the two bourses agreed to co-operate in developing yuan products.

They will also connect their data centres and work closely on technology and regulatory issues.

Li said the agreement "allows us to build on Hong Kong's position as the premier offshore yuan centre by developing closer links with Singapore and helping regional investors deploy a growing pool of investable offshore yuan".

Boecker said the collaboration, which would lead to additional products and services becoming available on both exchanges, was "yet another example of how the Asian gateway enables easier access to Chinese capital markets".

"By including regulatory collaboration in this partnership, we are paving the way for Asian markets to have a more prominent and unified voice regarding global developments and regulatory reforms," he said.

In terms of market capitalisation, Hong Kong ranks sixth in the world and Singapore 20th.

Louis Tse Ming-kwong, director of VC Brokerage in Hong Kong, said: "It would be good for the HKEx to have SGX as a partner instead of a rival. They could work together on the yuan business as the currency is trading internationally.

"Hong Kong has the mainland backup while Singapore is gateway to Southeast Asian countries. But whether the partnership will become a good marriage will depend on the details of their future products or other business relationships."

Meanwhile, regulators on the mainland and in Hong Kong have laid out the framework for the impending launch of a long-waited mutual fund recognition scheme, which would allow international managers to sell fund products on the mainland and mainland funds to be sold in Hong Kong.