Hong Kong Exchanges & Clearing (HKEx) and Shanghai Stock Exchange have signed a pact that facilitates closer cooperation with regard to new Chinese fund issues. The pact involves cooperation in the areas of local and international fundraising by Chinese companies and enhancing intelligence sharing, product development and personnel training.

HKEx CEO Paul Chow expects the arrangement to strengthen Hong KongÆs role as an access hub for money flowing in and out of qualified domestic institutional investor (QDII) and qualified foreign institutional investor (QFII) products.

Ronald Arculli, chairman of the HKEx, believes Hong Kong will play a key role in introducing international standards and best practices to Chinese issuers û which should in the longer term benefit investors as rules and regulations are harmonised.

Chow says there are also plans for closer cooperation in joint product development. He says the exchanges are already working to develop the first genuine A-share ETF product, which should be ready for listing in Hong Kong by the second half of this year.

Other possibilities on the horizon include callable bull and bear contracts, derivative warrants, futures and A-share based options û instruments which were previously unavailable to international investors but key to risk management in investing in the A-share market.

The agreement was signed by Chow and Zhang Yujun, president to the Shanghai Securities Exchange (SSE) in Shanghai. Other officials present at the ceremony included: Tu Guangshao, vice mayor of Shanghai; Geng Liang, chairman to the SSE; and Arculli.

Zhang says the SSE will prioritise stabilising the Chinese capital market this year. Aside from plans to further market infrastructure and deepen the level of institutional participation in the Chinese capital markets, the Shanghai exchange will focus on pushing the development of a domestic debt market and furthering the exchangeÆs product development.

Within this year, investors will see a Shanghai-Shenzhen 300 ETF and the mainlandÆs first publicly listed Reit available on the Shanghai exchange, Zhang says.

A stronger range of fixed income-based ETFs is also in the works. Instruments like these are expected to significantly contribute to improving liquidity in the highly regulated Chinese debt market.