Shenzhen, Dubai enhance financial cooperation

The Shenzhen Stock Exchange (SZSE) and Dubai Financial Market (DFM) have signed a memorandum of understanding outlining plans to explore closer cooperation in indexes, exchange traded funds, and fixed-income products, and the feasibility of new mechanisms and channels for cross-market financing.

The MoU, signed on Wednesday, marks a milestone in collaboration between the financial markets of China and the United Arab Emirates.

The SZSE and the DFM also pledged to organize regular senior executive meetings, collaborate on marketing promotion and sharing of know-how, and conduct joint research.

"This MoU with the SZSE is a pivotal step in strengthening our cross-border ties, driving global investment opportunities, and enhancing market accessibility. By leveraging our combined strengths, we are not only reinforcing the ties between our financial ecosystems, but also paving the way for new avenues of growth and innovation that will benefit investors and stakeholders in both regions," said Hamed Ali, CEO of DFM & Nasdaq Dubai.

This year marks the 40th anniversary of the establishment of China-UAE diplomatic relations. The non-oil trade volume between the UAE and China has increased 800-fold since 1984.

"The agreement will deepen practical cooperation between China and the UAE, and strengthen the capital market's capacity to serve the real economies of both countries," a representative from the SZSE said.

The SZSE said the MoU entails more bilateral road shows and promotional activities, cross-border investment, financing products and channels.

The document was signed at the China-UAE (Dubai) Capital Markets Collaboration Seminar in Dubai, attended by about 100 representatives from Chinese and UAE financial regulators, and major institutional investors.

At the meeting, executives from eight leading A-share companies in sectors such as digital economy, advanced manufacturing, and green and low-carbon growth, engaged in one-on-one discussions with international investors.

Going forward, the SZSE said it will double down on efforts to deepen connectivity with overseas capital markets, expand high-quality services to overseas investors and steadily promote the institutional opening-up of the capital market.

The exchange has been seeking new alignments with financial institutions in the UAE.

In December last year, it signed an MoU with the Abu Dhabi Securities Exchange in the capital of the UAE on closer cross-border capital market cooperation.

Zhang Yiming, managing director and global executive head of equities at China International Capital Corp (CICC), said UAE funds are continuously increasing their investment in China's A-share market.

To meet their surging demand for investment opportunities, CICC plans to augment its banking and financing businesses in the UAE, especially after it received approval recently to open a branch in the country.

Zhang said the collaboration between the SZSE and the DFM has paved the way for exciting possibilities and expanding market frontiers. As to specific products, he suggested they could start by establishing an ETF connectivity mechanism, based on the successful experiences of other cross-border ETF channels.

In 2021, eligible ETFs were included in the Stock Connect program between Hong Kong Exchanges and Clearing Ltd and the SZSE and the Shanghai Stock Exchange.

"Broad-based index ETFs and thematic investment ETFs can be considered priorities. The two exchanges can also strengthen bilateral cooperation in green finance by expanding the dual listing of green bonds and other fixed-income products in both markets," Zhang said.