China has given the green light to its maiden exchange-traded funds (ETFs) that will focus on Saudi Arabian equities, indicating a strategic expansion of its ties with the Middle East amidst escalating frictions with Western nations. This approval was granted on Friday, June 14, as reported by fund managers.
The new financial products, managed independently by Huatai-Pinebridge Investments and Southern Asset Management, are designed to emulate the performance of the Hong Kong-listed CSOP Saudi Arabia ETF, established in November by CSOP Asset Management.
The approval will further deepen the cooperation between Saudi and China in capital markets,
expressed Ding Chen, CEO of CSOP.
The CSOP Saudi Arabia ETF, which mirrors the FTSE Saudi Arabia Index, has experienced a decline of about 5 percent this year, in contrast to a 3 percent rise in the China’s CSI 300 stock benchmark.
Insights from Reuters in August revealed that the stock exchanges of China and Saudi Arabia were in discussions to permit ETFs to be listed on each other’s markets. This is part of a broader initiative to fortify financial connections as diplomatic ties between the two countries warm.
Through these ETFs, Chinese investors will gain access to trading shares in prominent Saudi companies, such as the oil behemoth Saudi Aramco and the Saudi National Bank.
China, irked by perceived economic coercion from the United States, is actively courting partners in Europe, the Middle East, and Africa, including Saudi Arabia, a traditional U.S. ally.
In a recent statement to Reuters, China’s securities regulator expressed its enthusiasm for Middle Eastern financial institutions and investors, including those from the Middle East, to bolster their investments in China.
The regulator’s statement was a response to an inquiry from Reuters regarding the acquisition of a 10% holding in China Asset Management Co (ChinaAMC) by Qatar’s sovereign wealth fund, marking it as the second-largest mutual fund firm in China.