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New SGX Yuan Options And Chinese Bank Local Incorporation Strengthen Economic Ties between Singapore and China

More Chinese business entities would probably consider expanding their operations in Singapore following a series of good news from the Singapore parliament.

The Singapore Exchange Ltd (SGX) recently recognized the Chinese yuan as one of the denominations that can be traded, quoted, listed and settled in the country’s stock market. The SGX aims to increase its share of Chinese equities and currency trading, which Hong Kong currently dominates.

The move is seen to encourage China-based and local Chinese-owned companies to list in the SGX. Once a company lists itself on the SGX, a ripple effect would occur, and as a result, more companies would also get themselves listed on the SGX.

As of press time, there are over 4,000 Chinese-owned companies conducting their business operations in Singapore. 142 are currently listed in the SGX, with investments reaching up to US $770 million.

SGX CEO Magnus Bocker says that this move will boost the exchange’s position as a foremost Asian exchange for investors and fundraisers who wish to grab a piece of China’s growth.

Meanwhile, the Monetary Authority of Singapore (MAS) recently announced that two Chinese banks would be accepted into its the Qualifying Full Bank (QFB) programme. This means the banks are now required to incorporate themselves locally, allowing them banks to set up as many as 35 branches in 50 business locations across the island state.

Also, one of the two Chinese banks has also been granted authorization to serve as a clearing bank for RMB transactions.

The two news would allow companies to transact in yuan and make it easier for branches and subsidiaries to send and receive capital from their headquarters in China.

China is enjoying tremendous growth from its manufacturing sector. Singapore’s status as a global business hub would be very ideal for Chinese companies that are looking to venture abroad.