Strengthening financial ties through green finance and market integration  

The Monetary Authority of Singapore (MAS) announced a set of new initiatives to strengthen financial cooperation with China, particularly in green finance and capital markets. The announcement was made at the 20th Joint Council for Bilateral Cooperation (JCBC) meeting in Singapore, co-chaired by Singapore’s Deputy Prime Minister, Mr. Gan Kim Yong, and China’s Vice Premier, Mr. Ding Xuexiang. These initiatives represent a collaborative effort to deepen financial connectivity and create new opportunities in sustainable finance and investment.  

Key Initiatives to Drive Green Financing  

The China-Singapore Green Finance Taskforce (GFTF), established by MAS and the People’s Bank of China (PBC) in 2023, has undertaken an expansion of the Common Ground Taxonomy (CGT) to integrate the Singapore-Asia Taxonomy. This will allow for an easier comparison between the European Union, China, and Singapore’s green taxonomies, facilitating cross-border green loans, green bonds, and fund investments.  

The green financing collaboration also includes a Green Corridor for Panda Bond issuances, which will help catalyze green financing flows between China and Singapore, with industry partners actively participating in these bond issuances. This initiative will foster cross-border financial activity focused on sustainability, enhancing the region’s environmental impact.  

Expanding Access to China’s Bond Market  

In a bid to facilitate greater international investment in China’s bond market, MAS and PBC are exploring a pilot program utilizing China’s “over-the-counter” bond market framework. This initiative will involve Singaporean and Chinese banks, enabling them to offer trading and custody services for selected fixed-income products in the China Interbank Bond Market. This enhanced access could significantly bolster cross-border investments in China’s fixed-income products and attract new international investors.  

 Growth in ETFs and Indices  

Building on the popularity of existing Exchange Traded Fund (ETF) Product Links between the Singapore Exchange (SGX) and the Shenzhen and Shanghai Stock Exchanges, MAS and the China Securities Regulatory Commission (CSRC) are exploring an expansion of ETF product offerings. Additionally, SGX and the China Securities Index are in discussions to introduce a new index, following the successful launch of the Emerging Asia Technology Index in January 2024.  

This collaboration aims to diversify the investment options available to investors in the region, strengthening the capital markets ecosystem with new ETF products and indices that align with investor demand.  

 First Panda Bond Listing in Singapore  

In a notable milestone, MAS and PBC celebrated the listing of the first Panda Bond on the Singapore Exchange. Issued by UOB, the three-year, RMB 5 billion Panda Bond marks an important step in encouraging greater international participation in the Panda Bond market. The listing in Singapore will allow for expanded access to Chinese financial instruments for global investors, further enhancing Singapore’s status as a financial hub.  

 Strategic MoU with Shanghai Gold Exchange  

MAS also announced a Memorandum of Understanding (MoU) between UOB and the Shanghai Gold Exchange (SGE), focused on promoting proprietary trading and physical gold delivery services. The MoU will provide ASEAN gold suppliers and investors with innovative solutions, facilitating cross-border access to China’s precious metals market and creating a new dimension of financial cooperation between the two nations.  

 Supporting Chinese Firms’ Regional Growth  

In alignment with the CSRC’s policy to support Chinese firms’ international expansion, MAS encouraged eligible Chinese companies to list on SGX, particularly those looking to grow operations in Southeast Asia. This initiative will enable Chinese companies to access international capital markets, providing them with greater financial flexibility to scale and diversify.  

 Strengthening Bilateral Financial Relations  

At the JCBC meeting, Mr. Chee Hong Tat, Singapore’s Minister for Transport and Second Minister for Finance, expressed optimism about the deepening financial ties between China and Singapore. “Financial cooperation has been a key pillar underpinning the strong bilateral relations between China and Singapore,” he noted. “The strong slate of initiatives announced today at the 20th anniversary of JCBC reflects our continued commitment to deepen financial connectivity between our markets.”  

These initiatives underscore Singapore and China’s commitment to sustainable finance and capital market integration, setting the stage for expanded financial cooperation and innovation. Through these partnerships, Singapore continues to strengthen its role as a key financial hub in Asia, while supporting China’s international financial aspirations.

Source: Monetary Authority of Sinagapore