The world of finance is an intricate web of opportunities and innovations, and the rapidly evolving Exchange-Traded Fund (ETF) landscape is no exceptionAs Asia’s premier ETF issuer, Southern Asset Management has recently taken significant strides to enhance connectivity between the Singapore Exchange (SGX) and the Shenzhen Stock Exchange (SZSE), facilitating a groundbreaking collaboration that paves the way for new investment avenues in the region.

On December 30, 2022, Southern Asset Management proudly listed the Southern CSI 50 Innovation and Entrepreneurship Index ETF (stock code: SCY) on SGX, becoming one of the first entities to partake in the new ETF mutual recognition program between the two exchangesThis ETF serves as a conduit for Singaporean investors to gain exposure to the top 50 rapidly growing Chinese companies within the vibrant China A-shares market, specifically targeting the companies listed on the STAR Market and the ChiNext Board—which are recognized for their remarkable growth potential.

SCY is not just another financial product; it's a beacon of opportunity within the Chinese market

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Trading in Singapore dollars at an initial price of SGD 1 per unit, investors can participate in this unique growth narrativeWith a focus on firms that boast advanced technologies and innovative capabilities, SCY tracks companies that align with the broader national strategy of transitioning towards a high-quality growth framework, a vision strongly advocated by the Chinese governmentObservably, amid macroeconomic challenges, the performance of the Dual Innovation 50 Index—the benchmark tracked by SCY—illustrated resilience, marking a year-on-year net profit growth rate of 12.2% in the third quarter of 2022, significantly outpacing the performance of the Shanghai and Shenzhen 300 Index during the same period.

Moreover, Southern Asset Management further augmented its offerings with the introduction of the Southern FTSE Asia Pacific Low Carbon Index ETF (stock code: LCS), which was listed on the SZSE

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This ETF signifies the first cross-listing directed at domestic investors from the New Exchanges, and aims to accommodate those seeking sustainable investment frameworksLCS strategically invests in over 200 stocks across 11 economies in the Asia-Pacific region, strategically targeting companies that demonstrate robust sustainable growth potential.

In commemorating the launch of these innovative financial instruments, Loh Boon Chye, CEO of SGX Group, remarked that these listings represent a significant milestone for both Singapore and China under the ETF connectivity frameworkHe highlighted Southern Asset Management's pivotal role in the Asia-Pacific region, noting their management oversight of nearly SGD 2 billion in ETFs on SGX aloneThe partnership is poised to foster deeper financial cooperation, ensuring that both markets are poised for progressive development.

In alignment with this sentiment, Liang Xin Song, Deputy Director of Monetary Authority of Singapore (MAS), emphasized that the ETF product linkage is underscored by strong, collaborative efforts towards the internationalization of the Renminbi

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He acknowledged the growing interactions between financial institutions across both markets as they explore emerging opportunities such as capital market expansion and green finance initiatives.

Ding Chen, the CEO of Southern Asset Management, expressed his enthusiasm regarding the company's role as a pioneer in the launch of these dual-listed ETFsHe noted that the mutual listing of ETFs greatly enriches the spectrum of cross-border investment products, a response to the increasing demand from investors in both Singapore and China for more diversified investment solutionsThe involvement in this mutual recognition program marks a critical milestone in Southern Asset Management's growth trajectory in Singapore, and the firm aspires to leverage this initiative for the benefit of investors in both markets.

The framework for cross-listed ETF connectivity was established under the auspices of the 17th Singapore-China Bilateral Cooperation meeting, heralding a new era in financial collaboration between the two nations

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Following the signing of a memorandum of understanding on December 28, 2021, between the SZSE and SGX Group, efforts have been directed towards connecting ETF issuers in each exchange, thus creating seamless pathways for cross-border capital flowThe dual listings of the SCY and LCS symbolize not only the growing financial interconnectivity between China and Singapore but also serve to broaden the diversity of investment choices available to investors.

Established in 2008, Southern Asset Management is a trailblazer in the industry, being the first mainland Chinese asset management company to set up operations overseasIt has carved a niche focusing on the Chinese investment landscape, issuing and managing both public and private fund products globally, while also providing advisory services to Asian and global investorsMoreover, Southern Asset Management stands out as a leading ETF issuer in Asia, solidifying its reputation in a competitive market

The company's Singapore subsidiary, which commenced operations in 2019, aims to serve regional clients and present extensive investment opportunities from the Chinese capital marketsAs of August 31, 2022, Southern Asset Management reported assets under management exceeding USD 12 billion.

In conclusion, Southern Asset Management's forward-thinking strategies are not merely about financial gains; they encapsulate a vision of cross-border collaboration and mutual growth between economy-driven nationsAs investor landscape continues to evolve, with increasing demand for innovative investment solutions in a rapidly shifting market, the pioneering efforts made by Southern Asset Management in enhancing ETF connectivity will undoubtedly yield significant benefits for a diverse range of investors seeking robust options in both the Chinese and Singaporean markets.