Hongkonger ETF Offensive: New Financial Bridges to Saudi Arabia

The Saudi market is further opening up to investments from Hong Kong. In a remarkable move, Hang Seng Investment Management received approval to launch a Hong Kong-oriented Exchange Traded Fund (ETF) in Saudi Arabia. This marks the second ETF manager to receive the green light for this market. The Saudi Capital Market Authority announced that the SAB Invest Hang Seng Hong Kong ETF will be launched on the Saudi stock exchange. Managed by the investment arm of Hang Seng Bank and SAB Invest, a subsidiary of Saudi Awwal Bank, the ETF is designed to track Hong Kong's Hang Seng Index while being adjusted to comply with Shariah investment rules. The exact timing of the listing is yet to be determined. It is expected that the ETF will follow the Albilad CSOP MSCI Hong Kong China Equity ETF, which was the first Hong Kong-focused ETF to receive regulatory approval. The latter has already generated capital equivalent to $1.3 billion from local Saudi investors before its official launch on October 22. Recent developments represent another step for Hong Kong toward stronger connections with financially powerful investors in the Middle East. Hong Kong's Financial Secretary Paul Chan expressed hopes at the Bund Summit in Shanghai in September for "reciprocal steps" this year, including the listing of another Hong Kong ETF on the Saudi stock exchange. At the same time, Hong Kong's Chief Executive John Lee emphasized in his annual policy address that collaboration with sovereign wealth funds from the Middle East is a priority. A look at past initiatives also shows that Hong Kong became more active last year with the introduction of the CSOP Saudi Arabia ETF. The first and so far only ETF focused on the Saudi stock market in the Asia-Pacific region attracted an initial investment of $1 billion and has now accumulated $1.3 billion.