The biggest market in our world is currently China. However, because of the numerous regulations that the government has put on trading and business, it is very hard to tap into that market section and truly profit from it. Several western companies managed to do it, but for a beginning firm or a startup, it is virtually impossible.
China is the biggest market, which makes it the most desired one to acquire, it doesn’t matter which industry a business is from, it is vitally important for it to get a foothold in China. The same is with financial institutions and firms. in this case, the Moscow Exchange and the Shenzhen Stock Exchange managed to come to a MoU (Memorandum of Understanding). MoUs are usually the starting point of the greatest of deals.
The CEOs of the firms, Alexander Afanasiev, and Peng Ming have met on Monday during which they co-signed the MoU, opening the road for many Russian and Chinese stock exchange enthusiasts. Not only that but the markets will be subject to numerous changes, as the CEOs have agreed that joint marketing ventures and projects will be undertaken as soon as the partnership begins.
This also signals about potential lightening on the restrictions for Russian traders within the borders of China. In the case of this MoU, the Russians will need as much room as possible to make it profitable not only for themselves but for the Chinese as well. Because of this, a clear link between Moscow and Shenzhen could be established, which may lead to potential exclusive deals in terms of international business. However, Moscow needs to be very careful with this deal because the “trade war” The US and China are having has been damaging Asian stocks.
This is not the first effort from the Russians
This Memorandum of Understanding is the fruit of the many years of labor that the Russian business sector has been conducting in mainland China. The Russians have been interested in the revival of a healthy monetary relationship between the two countries and have been working hard for it. The settlement in national currencies was exactly was Russia was after because of the loss of yuan-denominated instruments. Besides that, infrastructure has become a key point of the Russian side. Chinese developers offer a cheaper approach to a very profitable sector, which the Russians can’t ignore.
These agreements have been going on for a long time, as Russia has quite a lot of them under their belt at this point. They are targeting the major financial bodies of China, to be able to successfully tap into them should the need arise. Besides, the two countries have a similar ideological past, which in a way, makes it easier to cooperate.