China has marked a significant shift in its investment strategy by authorizing its inaugural exchange-traded funds (ETFs) that focus on Saudi Arabian equities. Fund managers have indicated that this move is an extension of China’s efforts to strengthen relations with Middle Eastern nations amid a backdrop of increasing tension with Western countries.
Managed by Huatai-Pinebridge Investments and Southern Asset Management, these newly approved ETFs will mirror the CSOP Saudi Arabia ETF listed in Hong Kong, as reported by sources from within the managing firms. The CSOP Saudi Arabia ETF aligns with the FTSE Saudi Arabia Index and was introduced by Hong Kong’s CSOP Asset Management.
‘The approval will further deepen the cooperation between Saudi and China in capital markets’, stated Ding Chen, CEO of CSOP.
Comparatively, the CSOP Saudi Arabia ETF has seen a decrease of about 5% this year, while China’s benchmark CSI 300 index has experienced a 3% rise.
Discussions concerning the mutual listing of ETFs on each nation’s stock exchanges were reported earlier, highlighting the deepening financial connections between China and Saudi Arabia in tandem with more amicable diplomatic relations.
Chinese investors will now have the opportunity to trade in prominent Saudi stocks, including behemoths like Saudi Aramco and the Saudi National Bank, through this ETF arrangement.
China, increasingly wary of the United States’ economic policy measures, has been actively pursuing stronger links with countries across Europe, the Middle East, and Africa. This diplomatic endeavor includes fostering closer ties with Saudi Arabia, a traditional U.S. ally.
Recently, China’s securities regulator welcomed foreign financial entities and investors from the Middle East to broaden their investments in China. This invitation was extended in response to inquiries regarding Qatar’s sovereign wealth fund’s decision to acquire a 10% stake in China Asset Management Co (ChinaAMC), which stands as China’s second-largest mutual fund company.