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Business deals

Xi-Abe summit to trigger dozens of cross-border deals

Japanese and Chinese ETFs to cross-list, while Mizuho and Citic plan co-financing

The Shanghai Stock Exchange, pictured here, is expected to sign a cross-listing agreement with the operator of the Tokyo Stock Exchange.   © AP

SHANGHAI/TOKYO -- From trading Nikkei Stock Average-related products on the Shanghai Stock Exchange to jointly funding overseas infrastructure, companies from China and Japan will be signing an array of deals when the leaders of the two countries meet in Beijing on Friday.

As Beijing ditches its cold-shoulder strategy and seeks to improve relations with Tokyo amid a deepening U.S.-China trade war, Japanese companies are also eager not to miss out on the opportunities. Hundreds of business leaders are scheduled to accompany Prime Minister Shinzo Abe to China, the first official visit by a Japanese leader in seven years.

In a symbol of deepening ties between the two countries' economies, Japan Exchange Group, the operator of the Tokyo Stock Exchange, and the Shanghai Stock Exchange plan to sign an agreement on cross-listing exchange-traded funds.

For the first time, ETFs that track the Nikkei Stock Average and Topix are to be listed in China. The TSE, meanwhile, plans to pick up new funds from the Shanghai bourse that Japanese investors are likely to take an interest in. The Tokyo bourse already includes China's benchmark SSE 50 Index in its more than 200 ETF offerings.

While ETFs' popularity has pushed worldwide trading up to $18 trillion in 2017, quintupling over the previous decade, Japan Exchange Group holds only a 2% share of this enormous market. The company hopes to give its ETF business a shot in the arm by tapping into growing Chinese demand for asset management, particularly in the expanding middle class.

In infrastructure funding, Mizuho Financial Group plans to sign a deal with Citic Group and China Export & Credit Insurance, also known as Sinosure, on overseas financing to coincide with the meeting between Chinese President Xi Jinping and Abe.

A construction line of an elevated train is seen in Bangkok, Thailand. China and Japan will be jointly financing projects in Southeast Asia and Africa.    © Reuters

The partnership will be a centerpiece of the two nations' plans for joint infrastructure development in third countries. Abe is slated to attend a forum on infrastructure development during his three-day visit, accompanied by top executives from Japanese banks trading companies. More than 30 infrastructure-related agreements are expected to be signed.

Under the agreement, Mizuho will arrange fund procurement for overseas projects financed by Citic, through such channels as syndicated loans and lending by Mizuho Bank branches.

The partnership is expected to focus on such regions as Southeast Asia and Africa, where infrastructure construction is in full swing. The trio is set to support projects totaling as much as 100 billion yen ($892 million).

Mizuho also hopes that participating in Chinese projects abroad will encourage other companies from Japan and elsewhere to do the same. Growing concerns about poor transparency and suspicion of Beijing's motives had put off many businesses from doing so.

Meanwhile, Japan's Nomura Holdings plans to set up a joint fund with state-run China Investment Corp. to help companies launch businesses in both countries. The two companies are expected to sign an agreement to coincide with the summit. Japan's three megabanks, including Mizuho, will contribute to the fund, which will solicit funds from institutional investors in both countries.

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