Hong Kong: First Saudi-focused ETFs to List Before Year-End

Officials have revealed plans to list the first Saudi exchange-traded funds (ETFs) that invest in Hong Kong’s stock market before the end of the year, as authorities in Hong Kong seek to strengthen financial links between the two markets.

For his part, Hong Kong’s Financial Secretary Paul Chan confirmed in a speech at the Bund Summit in Shanghai that the government expects “some reciprocal moves” to take place this year, which will include listing two Hong Kong-focused ETFs on the Saudi stock market.

The planned listings come after the launch of the first Saudi equity ETF in Hong Kong in 2023, which attracted assets worth $1.25 billion.

In this context, Rebecca Sen, lead analyst for Hong Kong ETF research at Bloomberg Intelligence, said: “CSOP is better positioned to list a feeder fund for Hong Kong ETFs in Saudi Arabia in the second half of 2024.

Sen said that the Hong Kong ETF listed in Saudi Arabia may hope to attract up to $100 million in assets, with participation from large institutional investors such as the Public Investment Fund.

In July, CSOP in Hong Kong listed the first Sharia-compliant ETF in Greater China.

According to data available to (Mal), the establishment of these funds comes within the framework of the Public Investment Fund’s efforts to deepen partnerships in various markets around the world, through the listing of an index fund on the Hong Kong Stock Exchange that tracks Saudi stocks.

The Saudi CSOP Fund is the first ETF, which started on November 29, 2023, targeting the Saudi financial market in East Asia, and is managed by CSOP Asset Management Limited in cooperation with the Public Investment Fund.

In February of last year, the Hong Kong Stock Exchange and the Saudi Stock Exchange’s Tadawul Group, the operator of the Saudi financial market, signed an agreement to cooperate in several areas, especially joint listing. At the time, there was an effort to persuade the giant oil company, Aramco, to list in the Asian financial center.