SGX eyes closer ties with Chinese bourses

As the Chinese equity market has been on an upswing this year on the back of the country's continued economic recovery, SGX Group (Singapore Exchange) will deepen cooperation with Chinese bourses and better meet the fundraising and expansion needs of Chinese companies, said Loh Boon Chye, CEO of SGX Group.

Loh made the remarks during an interview in Shanghai on Friday. He was in the city for a conference with the Shanghai Stock Exchange.

Loh said the Chinese market "has done well" over the past few months, helping to buoy international investor sentiment and inducing capital flows into Chinese assets.

International institutional investors and asset managers have stepped up investments in the FTSE China A50 Index — the only index that allows overseas investors to directly invest in the 50 Chinese companies with the largest market capitalizations.

This has propelled trading of Chinese equities and currency derivatives at SGX, he said.

Several investors have shown interest in sectors related to China's economic growth, such as consumption and shipbuilding. Increased exposure to China is part of a strategy by global investors to diversify their investment portfolios. Recovery in the real estate market has also bolstered trading of real estate investment trusts, said Loh.

Trading by investors from Europe and the United States accounted for more than one-third of the currency futures trading conducted in the T+1 period, or non-Asian trading hours, he added.

According to market tracker Wind Info, the value of China's exchange-traded funds topped 5 trillion yuan ($700 billion) in late August, a record. This is in line with the global trend, as investment value in the global ETFs industry hit a record high $17.34 trillion at the end of July, according to independent market consultancy ETFGI.

The ETF connectivity link between the SGX and the SSE, which officially set sail at the end of 2023, was expanded in July, bringing the total number of ETFs listed on Singapore-China ETF Links to 10.

The SGX will work with the Shanghai bourse to develop indexes based on Asia themes and sectors, including the largest companies in Asia. AI and consumption could be the two themes on which future indexes may be developed with the joint efforts of the two exchanges, and hopefully adopted by ETF issuers, he added.

Southeast Asia is already the world's fifth-largest economic bloc now and will further rise to the fourth position in 2030. In general, Asia has been growing relatively stronger than the rest of the world. ETFs, with higher accessibility, can be good choices for investors around the globe to tap into the strong economic growth in Asia, according to Loh.

Apart from the connectivity program, SGX will deepen cooperation with the SSE to help Chinese companies already listed in Asia expand their footprints globally and raise funds in Southeast Asian markets, said Loh.

About 600 companies are now listed on the SGX, with their combined market cap reaching $600 billion. Nearly 20 percent of the companies are from the Chinese market, meaning at least half of these companies' revenue comes from China. These companies belong to various industries such as industrial, consumer and the digital economy.

At least 10 REITs trading on the SGX have China exposure, among which four are purely China-based ones.

SGX started to streamline its initial public offering process earlier this year. It now only takes about six to eight weeks for the IPO applicant to progress from the time of application to an IPO.

The Singapore bourse has been the best-performing exchange in Southeast Asia so far this year, with the country's benchmark Straits Times Index up 18 percent. For the past financial year ending June 2025, SGX's securities daily average value spiked by 27 percent year-on-year. Mid-cap stocks have attracted greater participation from both institutional and retail investors, according to Loh.

To further strengthen market activity, the Monetary Authority of Singapore officially kicked off in February the 5 billion Singapore dollar ($3.9 billion) Equity Market Development Programme to attract more asset managers to look at Singapore stocks and broaden participation. So far, about 20 percent of the funds have been granted to three asset managers.

shijing@chinadaily.com.cn