In a historic move bolstering financial cooperation, Hong Kong debuted the first exchange-traded fund (ETF) tracking Saudi equities on Wednesday. Managed by CSOP Asset Management, the CSOP Saudi Arabia ETF (2830. HK) represents a groundbreaking initiative in the Asian market. The Public Investment Fund (PIF), Saudi Arabia’s sovereign wealth fund, stands as a significant anchor investor, according to CSOP.
The ETF, tracking the FTSE Saudi Arabia Index, opened with a 0.9% gain in its initial trading session. Hong Kong Financial Secretary Paul Chan marked the occasion as a milestone in financial collaboration with Saudi Arabia, enabling regional investors to participate in the kingdom’s economic development. Chan expressed optimism about future financial products being introduced in Hong Kong and Saudi markets.
The FTSE Saudi Arabia Index, consisting of 56 constituents, boasted a total market value of $276.8 billion at the end of October. Through the ETF, Hong Kong investors can trade Saudi stocks, including industry giants like Saudi Aramco (2222. SE) and the Saudi National Bank (1180. SE), using Hong Kong dollars or Chinese yuan.
PIF Deputy Governor Yazeed A. Al-Humied emphasized the unique opportunity the fund offers for investors to tap into Saudi Arabia’s rapidly growing economy. PIF, underscoring its commitment, is positioned as the lead investor for the fund.
Earlier reports in August indicated talks between the Hong Kong Stock Exchange (0388. HK), a mainland bourse, and the Saudi Stock Exchange for agreements facilitating cross-market trading of equities and bonds.
The ETF launch aligns with China’s strategic efforts to broaden economic ties beyond the U.S. Frustrated by perceived economic policy weaponization by the U.S., and China has intensified diplomatic engagements with regions including Europe, the Middle East, and Africa. Saudi Arabia, a key ally of the U.S., is a focal point of this diplomatic outreach.
While energy interests remain a cornerstone of Sino-Saudi relations, trade, investment, and security ties have expanded. China currently holds the position of Saudi Arabia’s top trading partner, with bilateral trade reaching $87.3 billion in 2021.
Recently, the People’s Bank of China and the Saudi Central Bank signed a local currency swap agreement worth $6.93 billion to strengthen financial cooperation, promote trade, and encourage investment between the two nations.
