SHANGHAI — China and Japan agreed Monday to achieve cross-listing of investment funds traded on stock exchanges in each other’s countries as soon as possible, in another move to bolster their financial cooperation amid a thaw in bilateral ties.
The agreement would facilitate more Chinese and Japanese investors purchasing exchange-traded funds listed on Tokyo and Shanghai stock exchanges, which could invigorate financial markets in both nations, analysts say.
It will be the first time for Japanese ETFs to be listed in the Chinese mainland. Chinese retail and institutional investors would be allowed to buy and sell yuan-denominated ETFs tracking Japanese equity indexes.
While major Chinese ETFs have been already traded in the Tokyo Stock Exchange, the latest agreement between the two countries would make it easier for Japanese market participants to invest in Chinese financial products.
The new framework, agreed at the first meeting of the “Japan-China Securities Market Forum” held in Shanghai on Monday, will take effect as early as in the coming months, a Japanese government source said.
ETFs, which are traded like stocks during market hours, are mutual funds whose values fluctuate based on those of share, bond, currency, commodity or other financial product prices.
As costs to buy and sell ETFs are lower than those to trade mutual funds, Japanese and Chinese retail investors have become more interested in boosting their holdings of ETFs in recent years, an economist said.
The securities market forum took place following an agreement on financial cooperation reached when Chinese Premier Li Keqiang and Japanese Prime Minister Shinzo Abe held talks in Beijing in October last year.
For more than five years until late 2017, Sino-Japanese relations are said to have been at their worst level in decades over a territorial row in the East China Sea.
But the situation has changed, with 2018 — the 40th anniversary of the signing and entering into force of the bilateral Treaty of Peace and Friendship — serving as an incentive to forge better ties.
Chinese President Xi Jinping is expected to make his first visit to Japan since he came to power in 2013 to attend a Group of 20 summit scheduled to be held in Osaka in late June.