ABU Dhabi Global Market (ADGM), the emirate’s international financial center, has agreed in principle with the Shanghai Stock Exchange to cooperate in establishing an exchange focusing on China’s foreign trade and investment, ADGM said Monday.

The partners signed a memorandum of understanding to develop the exchange in Abu Dhabi. It would cater to companies and investors involved in China’s Belt and Road Initiative, a drive to win trade and investment deals along routes linking China to Europe.

“At ADGM, we have the international platform to serve different kinds of enterprises and investors — global, regional and local — seeking exposure to the Middle East and North Africa and Belt and Road projects,” said Richard Teng, chief executive of ADGM’s Financial Services Regulatory Authority.

Teng said he could not give specifics of which instruments the new exchange would trade or when it might open, saying this would depend on demand among stakeholders in both ADGM and Shanghai.

Chinese financial institutions have approached ADGM to discuss the financial environment in Abu Dhabi and their development needs in the six-nation Gulf Cooperation Council (GCC), he added.

Trade and investment ties between China and the GCC have been growing rapidly. The region is a big oil supplier to China, and Sino-United Arab Emirates trade exceeded US$46 billion in 2016, according to Xinhua.

Ultimately, the new exchange will support not only the Belt and Road Initiative but also the internationalization of the Chinese yuan in the region, Teng said.

Abu Dhabi is trying to build up ADGM, which opened in October 2015 and is smaller than the international financial center in neighboring Dubai, as part of a drive to develop its economy beyond oil exports.(SD-Agencies)