By Gao Changxin in Shanghai and Oswald Chen in Hong Kong
Singapore's stock exchange plans to start listing securities denominated in the yuan as it challenges Hong Kong and Tokyo for a bigger share of equities and currency trading from the world's second-largest economy.
The move is also seen by analysts as a boost to the Chinese mainland's ambition to internationalize the yuan.
Singapore Exchange Ltd, or SGX, announced on Friday that it is ready to list, quote, trade, clear and settle securities denominated in the yuan as the city-state strives to be an offshore trading center for yuan assets.
"SGX, as the Asian gateway, is committed to being the exchange of choice for issuers with RMB fundraising needs and for investors who are keen to participate in the China growth story," SGX CEO Magnus Bocker said in a statement.
"The listing and trading of RMB securities on SGX will also extend Singapore's position as an offshore RMB center."
Issuers listing yuan securities on the exchange have the option of offering dual currency trading, either in the yuan or Singapore dollar, according to the exchange, which is the world's first exchange to offer the clearing of over-the-counter foreign exchange forwards for the yuan.
The first-ever offshore yuan IPO was conducted in Hong Kong last year, where billionaire Li Ka-shing's Hui Xian Real Estate Investment Trust raised 10.48 billion yuan (S$2.07 billion).
There are no yuan-denominated stocks in Singapore.
Global financial centers are scrambling for opportunities in the surging offshore trading of yuan assets, boosted by growing offshore yuan deposits accumulated in part through yuan-denominated trade settlement.
Singapore is competing against Hong Kong, Tokyo, London and many others to capture the yuan's growing offshore activities, as the Chinese mainland encourages the yuan's cross-border flow.
In April, London issued its first yuan-denominated bond, totaling 1 billion yuan.
Hong Kong also took a step forward this week, as lenders in the city are allowed to extend yuan loans to companies in the Qianhai Bay development zone in Shenzhen, created in part to test a freer yuan.
There are more than 4,000 Chinese companies operating in Singapore and 142 of them are listed on SGX with a total market capitalization of $606 million as of June 30, according to stock exchange data.
Ong Chong Tee, deputy managing director of the Monetary Authority of Singapore, the country's central bank, said last month that yuan deposits in Singapore had grown to about 60 billion yuan. Singapore-based companies such as Global Logistics Properties and Singamas issued renminbi debts in 2011.
Singapore's central bank is one of 17 central banks that have bilateral swap agreements with the People's Bank of China, the central bank.