Shanghai works with Kazakhstan on new Central Asia trading hub

Shanghai Stock Exchange has agreed a deal with Kazakhstan's Astana International Financial Center to launch a new stock exchange in the Kazakh capital, Astana. The deal was confirmed during President Xi Jinping's visit to Kazakhstan last week.

The Astana International Stock Exchange is expected to develop into a major trading hub in Central Asia and an important platform for financing projects linked to China's Belt and Road Initiative.

SSE will hold a 25.1 percent stake in the AISE, and will also provide technological, planning, product designing and marketing support during the creation of the new exchange, according to the agreement.

The stock exchange will provide integrated financial services including listing, trading and clearing, and investors will be able to trade a wide range of products including stocks, bonds, funds, commodities and derivatives.

Kazakhstan plans to use the AISE to privatize a large number of its state-owned companies, a key economic priority for the country, the Astana Times reported in April.

The exchange will also provide a number of strategic benefits for China.

It is expected to boost the internationalization of the Chinese yuan, or renminbi, by becoming a trading center for the renminbi in Central Asia.

The AISE will also play an important role in China's Belt and Road Initiative, as Kazakhstan and its neighbors along the "Silk Road Economic Corridor" are likely to receive a significant chunk of the $600 billion China plans to invest in the project by 2020.

The deal is a further sign of the strengthening financial ties between China and countries involved in the Belt and Road Initiative.

Three Chinese securities firms, including SSE, have set up subsidiaries in countries involved in the initiative, while 64 institutions from those countries now have QFII or RQFII certification in China, allowing them to trade on China's capital and securities markets, according to the China Securities Regulatory Commission.

A total of 963 companies listed on Shanghai's A-share market are currently involved in projects linked to the Belt and Road Initiative, the CSRC also revealed.

Jiang Yang, the commission's vice-chairman, believes that it is now only a matter of time before countries and companies in Central Asia and other regions being to issue Panda bonds, renminbi-denominated bonds issued by a non-Chinese issuer.