Saudi Arabia is stepping into new financial territory, granting approval for its first exchange-traded fund (ETF) that tracks equities listed in Hong Kong. This move by the Capital Market Authority (CMA) marks the debut of such a product in the Middle East, highlighting the growing financial interconnectivity between Saudi Arabia and Asian markets. The ETF, managed by AlBilad Investment Company in collaboration with Hong Kong’s CSOP Asset Management, is set to offer exposure to Hong Kong-listed companies, including major Chinese firms. The details of its launch date remain under wraps, but the significance of the approval is clear: Saudi Arabia is diversifying its financial offerings, and Hong Kong is deepening its ties with the region.
This development comes as Hong Kong and Beijing actively seek stronger relationships with Arab nations amidst rising geopolitical tensions with the West. Last year, Hong Kong made a significant step by launching Asia’s first ETF tracking Saudi equities, the CSOP Saudi Arabia ETF, which has since expanded to nearly HK$10 billion. These cross-listing efforts illustrate a shared goal between Saudi Arabia and Hong Kong to create new financial bridges, allowing investors in both regions access to diversified markets. Julia Leung, CEO of Hong Kong’s Securities and Futures Commission, has been instrumental in fostering these discussions, visiting Saudi Arabia in June to explore further collaboration.
China, too, is playing a part in this evolving financial relationship. In June, it approved its first two mainland-listed ETFs tracking Hong Kong’s CSOP Saudi Arabia ETF, providing Chinese investors with exposure to Middle Eastern companies. This mutual interest in cross-border financial products reflects a broader trend of economic cooperation between the regions, potentially reshaping the landscape of global finance. With these new ETFs, Saudi Arabia, Hong Kong, and China are carving out a unique space in the world of investment, as they look to capitalize on each other’s strengths in the face of shifting global dynamics.
(Source: Finimize | FT | SCMP)
