Singapore, China deepen financial ties with new capital market initiatives

Companies listed in Shanghai and Shenzhen may now be able to access new funds by issuing bonds in Singapore, all part of a series of new initiatives aimed at strengthening ties.

A new framework that streamlines processes and paperwork for bond issuance down to as little as six to eight weeks, is just one o

f more than two dozen agreements signed in December as part of an effort to boost bilateral cooperation.

"Streamlining listing processes and reducing friction, while requiring full compliance with Chinese corporate, listing and accounting standards, will give Chinese firms greater certainty and ease when they consider fundraising in Singapore," Chia Caihan, head of capital markets for Greater China at the Singapore Exchange (SGX), told China Daily.

Chia said listing bonds in Singapore offers Chinese firms the opportunity to attract regional and international investors.

"Having this collaboration work is not only about getting both governments to sit together, but also getting interested companies to come and take on this option," Chia said. "The A-share secondary listing framework is still pretty new, so we are devoting a lot of resources to making this work."

"When it comes to really attracting international capital, we are the place to go to in Southeast Asia," Chia said. "You get institutional funds coming not only regionally, but also internationally."

The secondary listing framework was one of 27 agreements signed at the 21st Joint Council for Bilateral Cooperation meeting in December in Chongqing. Other initiatives include the appointment of DBS Bank as an offshore renminbi clearing bank and over-the-counter bond market arrangements that grant institutional investors access to fixed-income products on the China Interbank Bond Market (CIBM). Both the Monetary Authority of Singapore (MAS) and the SGX announced the new framework.

"This development signifies a major step forward in capital market connectivity between Singapore and China," Xu Le, a lecturer at the National University of Singapore Business School's Department of Strategy and Policy, said. "It represents a milestone in bilateral cooperation in the securities market."

SGX has cultivated institutional strengths in environmental, social, and governance (ESG) frameworks and corporate transparency, positioning Chinese firms that adopt these practices to connect with like-minded institutional investors.

Chia emphasized that placing Chinese corporates on the same platform as other international companies — subject to identical rules — sends an important signal.

"China has a very comprehensive, strict set of rules that their existing companies already comply with," she noted. "We place Chinese corporates on the same platform, and it's the kind of equality they want."

A DBS spokesperson said Chinese enterprises now have more avenues to leverage Singapore as a regional hub and incorporate the city-state into their go-global strategies.

"Through secondary listings, they can diversify their capital sources and reduce the institutional costs of regional expansion," the spokesperson said.

With DBS Bank becoming Singapore's second RMB clearing bank, Chinese companies can tap into diversified payment methods and multi-currency services, the DBS spokesperson said, this is a significant benefit for firms operating across Southeast Asia.

"Many Chinese enterprises operate in Indonesia. In the past, converting Indonesian rupiah into RMB required an intermediate conversion through the US dollar," the spokesperson explained. "Now enterprises can directly convert Indonesian rupiah into RMB via DBS without going through the US dollar, resulting in significant savings in exchange rate costs."

Fu Fangjian, associate professor of finance at Singapore Management University, said attracting Chinese enterprise listings will help expand the size and liquidity of Singapore's capital market.

"By having Chinese enterprises list in Singapore, Singapore's capital market will enable international investors to more conveniently invest in the Asian growth story, strengthening capital allocation," Fu said.

Singapore provides a stable offshore function against a backdrop of rising regulatory risks in US markets and fluctuating liquidity in Hong Kong stocks. The efforts to work more closely together have lowered structural barriers for Chinese firms entering Singapore at a time when they face increasing headwinds in acquiring capital in US and UK markets.

"Multi-jurisdictional listings can hedge against geopolitical or policy uncertainties, enhancing corporate capital resilience," Fu said.

Ellis Ng is a freelance journalist for China Daily.