New ETF Debuts in Saudi Arabia Strengthen Financial Bridges to Hong Kong and China

Saudi Arabia is experiencing a significant expansion of its financial relations with Asia this week, as two exchange-traded funds (ETFs) that track stocks in Hong Kong and China make their debut in the Kingdom. The Albilad CSOP MSCI Hong Kong China Equity ETF, which has amassed an impressive 10 billion Hong Kong dollars (1.3 billion USD), ended its first trading session with a slight decline to 9.97 Riyals, starting from an initial listing price of 10 Riyals. This fund vehicle surpasses in size all ETFs already listed on the Saudi Arabian stock exchange. On the following day, the SAB Invest Hang Seng Hong Kong ETF is also set to be launched with a firm listing price of 10 Riyals. The timing of these debuts could hardly be more favorable, as the eighth edition of the pioneering Future Investment Initiative takes place simultaneously, attracting high-level executives from financial centers, akin to a mini-Davos. Among the distinguished guests are Bonnie Chan, head of the Hong Kong Stock Exchange, and Paul Chan, the city's Financial Secretary, who underscore the significance of the Gulf region for Asian investments. For investors in Riyadh, these ETFs offer a simplified way to participate in Chinese stocks in local currency. A year ago, a 1 billion USD ETF made the journey from Saudi Arabia to Hong Kong to trade there as the largest of its kind. According to Bloomberg analysts Eric Balchunas and Rebecca Sin, a multibillion-dollar asset swap program is at the heart of this exchange, aiming to enhance the appeal of domestic markets to external investors. Both Saudi Arabia and Hong Kong hope for stronger liquidity flows and increased market activity as a result. The Albilad CSOP ETF plans investments in Chinese stocks through the Hong Kong-based CSOP MSCI HK China Connect Select ETF, which counts the online retailer Meituan and the sports apparel manufacturer Anta Sports Products among its largest holdings. Chan from the Hong Kong Stock Exchange views the listing of Hong Kong ETFs in Saudi Arabia as a sign of reciprocity, following the previous introduction of two Saudi Arabian ETFs in Hong Kong to strengthen the understanding between both markets. He also announced that the Hong Kong Stock Exchange will be opening an office in Riyadh next year, further solidifying the bridges between the financial markets.