Shenzhen and Abu Dhabi exchanges link up as China and the Middle East move closer. An agreement was reached between the stock exchange in Shenzhen, China, and the Abu Dhabi securities market to encourage cross-border investment and listings. This agreement is part of the most recent wave of cooperation between institutions in nations that are attempting to reduce their dependency on the West.
Several days later, a similar agreement was reached between the Shenzhen exchange and the Saudi exchange, and a little over a month after another agreement was reached between the Shanghai Stock Exchange and the Dubai Financial Market, this one came together.
In a statement, Mike Wardle, the chief executive officer of the think tank Z/Yen Group, headquartered in London, stated, “what we are seeing is that international investment flows are shifting.”
He said many investments from the Middle East are beginning to come into China, and vice versa. This is co-occurring as some global investors leave China for Southeast Asian nations, such as Vietnam or Malaysia.
Towards the end of Wednesday, it was revealed that the Shenzhen Stock Exchange, located in the southern region of China, and the Abu Dhabi Securities Exchange (ADX), located in the United Arab Emirates, had signed a memorandum of understanding.
Additionally, Hong Kong, which the Chinese govern, has been strengthening its relations with the Middle East. This is evidenced by the recent establishment of the first exchange-traded fund (ETF) in the Asia-Pacific area that tracks Saudi Arabian stocks.
According to a statement released by the Saudi government earlier this month, the Public Investment Fund, a sovereign wealth fund, is increasing its investment in China’s eWTP Capital to around $200 million. eWTP Capital is a venture capital firm that focuses on creative start-ups.
Because Beijing’s relations with the United States have deteriorated due to disputes on various topics, including trade and technology, human rights, and Taiwan, the Middle East has become an increasingly crucial region for Beijing.
“The Gulf countries see it as in their interest to build strong relationships with China,” Wardle said. This is because they are attempting to reduce their dependency on the United States, which has traditionally been their biggest trading partner.
“They want to build greater connectivity with different parts of the world,” he explained further. And China is such a massive economic powerhouse. They want to be a part of it and to participate in it.
The Shenzhen exchange and ADX have issued separate statements indicating that the agreement aims to strengthen cross-border index and exchange-traded fund (ETF) cooperation and investigate the potential for international financing.
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