Hong Kong is planning to launch an exchange-traded fund (ETF) in partnership with Saudi Arabia, aimed at mirroring the stock indices of the Asian financial hub, as disclosed by a top-ranking official.
At the Capital Market Forum held in Hong Kong, Michael Wong, the region’s deputy financial secretary, announced intentions to establish a trading hub in Riyadh to strengthen economic ties with Saudi Arabia and mainland China.
“Several financial institutions are collaborating to list an ETF in the Middle East to track Hong Kong’s stock indices. Additionally, the establishment of an economic and trade office in Riyadh is under consideration by the Hong Kong government,” Wong stated.
The introduction of this ETF follows the inauguration of a Saudi Arabia Index-tracking ETF in Hong Kong in November 2023. Wong added, “Recent initiatives by the China Securities Regulatory Commission are set to enhance mutual access, simplifying the process for Saudi companies to tap into Chinese capital.”
Wong also revealed that by the end of 2024, Cathay Pacific Airways plans to initiate direct flights from Hong Kong to Riyadh, cutting travel time to approximately six hours. “The fourth quarter of this year will mark the relaunch of direct passenger flights between the two cities,” he confirmed.
“The alliance between Hong Kong and Saudi Arabia is poised to prosper and stand the test of time,” Wong remarked, highlighting the enduring partnership.
Saudi-Hong Kong Economic Collaboration
Khalid Al-Hussan, CEO of Saudi Tadawul Group, spoke at the forum’s opening, signifying the burgeoning relationship between the two nations. The two-day event, which started on May 9, attracted over a thousand investors, companies, and financial innovators to discuss the current market’s critical challenges and prospects.
“This forum serves as an essential conduit for Hong Kong and mainland China’s investors to engage directly with Saudi issuers, reinforcing the financial ties between two of the world’s most dynamic economies,” Al-Hussan stated.
Al-Hussan highlighted the technological advancements in Hong Kong and the economic diversification in Saudi Arabia as catalysts for a new era of cooperation and knowledge exchange that transcends capital markets.
Discussing the impact of Vision 2030 on Saudi Arabia’s stock exchange, Al-Hussan emphasized the Kingdom’s goal of creating an open market that integrates with global economies. “Following the implementation of Vision 2030, our stock exchange’s average daily trading volume has doubled over the past two years, reaching around SR9.5 billion, or approximately $2.3 billion, in Q1,” he added.
Abdulaziz bin Hassan, a board member of Saudi Arabia’s Capital Market Authority, pointed out the Kingdom’s transformation, with its market ranking among the top ten globally in terms of market capitalization. He also noted the significant increase in initial public offerings and the asset management sector’s rapid growth within the Kingdom.
“The market now averages around 40 IPOs annually, a stark increase from the past, and our asset management has expanded from $100 billion to $130 billion. Participant numbers in asset management have grown from 250,000 to over a million within five years,” Hassan remarked.
Bonnie Y Chan, CEO of Hong Kong Exchanges and Clearing Ltd, commented on the steady progress of Saudi Arabia’s economic diversification and the capital market’s potential for investors. Chan underscored the vital role of capital markets in enhancing global connectivity.
Targeting $3.2 Trillion in Capital Formation
Saleh Al-Khabti, Saudi Arabia’s deputy minister of investment transactions, disclosed the Kingdom’s ambitious target for fixed capital formation exceeding $3 trillion as part of Vision 2030. “We’re proud of our progress, and with a gross fixed capital formation of about $300 billion last year, we aim for an open and attractive market,” stated Al-Khabti.
He also pointed out the Kingdom’s healthy inflation, strong banking sector, and robust credit demand. “Saudi Arabia has witnessed non-oil sector growth above the long-term average, and we’ve seen a decline in unemployment rates and a rise in female labor force participation,” Al-Khabti added, extending an invitation to invest in Saudi Arabia.
Al-Khabti welcomed Chinese involvement in key sectors, including the automotive industry, mining, technology, and tourism, and highlighted the revised tourist target of 150 million visitors by 2030 after surpassing the initial goal last year.