TAIPEI – The Singapore Stock Exchange (SGX) and Taiwan Stock Exchange (TWSE) have announced plans to link their two markets. Both signed a letter of intention (LOI) earlier this week, promising that their two respective bourses will be joined to help facilitate better and more seamless cross-border trading.
Magnus Bocker, CEO of SGX, underscored the importance of the deal by explaining why investors seeking to penetrate the Chinese market are attracted to Singapore and Taiwan. In a statement, he said: “We are delighted to cooperate with TWSE on the study of a cost-efficient direct link between Taiwan and Singapore markets. International investors keen on Greater China opportunities are coming to Singapore and Taiwan because we are leading offshore Renminbi centres. There is therefore potential for cooperation in infrastructure and other areas so as to better serve these investors.”
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The move follows a similar agreement made between China and Hong Kong earlier this year, and represents an important breakthrough for further economic integration in the Asia-Pacific, especially in the case of Taiwan. The small island-state has constantly sought to avoid marginalization from the region’s fast-growing economic community by negotiating state-to-state agreements, despite occasional protestations from China. The stock exchange link with Singapore will be further affirmation that Taiwan is still able to do so.
Singapore and Taiwan are both leaders in high-tech industries and offer a multitude of different products for domestic and foreign investors. Currently, TWSE boasts 814 stocks, exchange-traded funds (ETFs), warrants, and Taiwan Depository Receipts (TDRs), whilst SGX has 770 equities. Although the link is still subject to regulatory approval, it looks likely to go through, and will streamline the trade and settling of stocks listed on each exchange.
Sush der-Lee, Bocker’s counterpart at TWSE, said: “TWSE and SGX have built a broad consensus around expanding international cooperation. The signing of the Letter of Intent is a practical mechanism for facilitating cross-border trade and will enable TWSE and SGX to provide more diversified services to their respective market investors.”
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Taiwan’s stock exchange is currently in talks with China to sign a cooperation pact with Shanghai, which could lead to the two bourses also agreeing to a link.
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