Singapore and Shanghai look poised for significantly closer collaboration on the corporate and financial services fronts.
A slew of agreements were signed yesterday at a major meeting in Singapore between officials and banking bosses to forge stronger ties between the two leading Asian financial centres.
Both sides pledged greater cooperation in developing new service architecture, technologies and talent, as China seeks to liberalise its capital markets and currency.
At the third Singapore-Shanghai Financial Forum, the Singapore Exchange signed a memorandum of understanding (MOU) with Shanghai Pudong Development Bank (SPDB) to encourage Chinese firms to use the bourse here as a capital raising platform.
OCBC inked two MOUs, one with the Bank of Shanghai for cooperation on financial service enhancements; another with the SIIC Trade Group to become the state-owned enterprise's main banking partner.
Other MOUs will see United Overseas Bank support Shanghai construction firm SUCG International Engineering in its South-east Asia expansion, and help Singapore financial technology firm Nufin Data launch a cloud solution for corporate clients in China.
Monetary Authority of Singapore (MAS) deputy managing director Jacqueline Loh sees plenty of scope for Singapore financial institutions to support China's move to liberalise its financial sector and channel company investments overseas under the Belt and Road Initiative.
Both sides can encourage a greater use of capital markets and direct financing channels, she said, citing MAS' Asian Bond Grant Scheme as an example. The scheme, launched in November, offsets up to half of issuance costs for first-time Asian bond issuers.
"Shanghai and Singapore can collaborate in creating a conducive eco-system for the fintech companies… There is also room to deepen information and knowledge exchange between Shanghai and Singapore industry participants," Ms Loh told the forum audience.
Her views were echoed by Shanghai Municipal Government deputy secretary-general Jin Xingming. He said Singapore is a major player in developing the offshore yuan market, and should keep doing so after the currency was added to International Monetary Fund's foreign reserve basket last October.
For SPDB, Singapore is now the gateway for capital flows. The bank opened its first overseas branch here just late last month after receiving an MAS banking licence on March 21.
"Singapore is an important channel for Chinese investors and companies to reach out to the world, particularly to Asean. Similarly, it's the hub for Asean-to-China flows," SPDB president Liu Xinyi said.
"As we gradually go global alongside Chinese capital - our London branch is set to open by year end - Singapore is a very important first stop."
Asset management firm NN Investment Partners is eyeing Shanghai as its next Asian hub after Singapore. But Singapore chief executive Gopi Mirchandani hopes to see less control of capital outflows.
"The inbound mechanisms, such as the QFII scheme, have improved significantly but the other way is still tightly controlled by quota. So Chinese investors are still not very well served, lacking a diversified portfolio," she told The Straits Times. QFII allows foreign institutional investors to invest in China.
Ms Mirchandani noted signs of change, following recent deregulation to allow onshore funds operated by wholly owned foreign asset management firms.