Under a Memorandum of Understanding (MoU) for the link, the two exchanges will jointly develop and promote ETF markets in Singapore and China through cross-border investments, the bourses said in separate statements late on Tuesday.

The MoU represents the latest step by China to open its capital markets. Earlier this month, China and Hong Kong bourses agreed to add ETFs to their stock connect schemes, and China's securities regulator announced plans to broaden the Shanghai-London Stock Connect to include capital markets in Germany and Switzerland.

"The strong demand for ETFs in Asia underscores the region's growing role as a global ETF hub and we are excited about the manifold opportunities that this partnership could bring," Loh Boon Chye, Chief Executive Officer of SGX, said in the statement.

Sha Yan, President & CEO of the Shenzhen exchange, said the agreement will provide investors in China and Singapore with diversified, cross-border opportunities.

As at end November, Singapore-listed ETFs exceeded 12 billion Singapore dollars ($8.86 billion) in assets, up nearly 50% from a year earlier, SGX said. The Shenzhen Stock Exchange currently lists 212 ETFs with a combined market capitalisation of $39 billion.

($1 = 1.3542 Singapore dollars)

(Reporting by Shanghai Newsroom; Editing by Kenneth Maxwell)