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Investors in China now have the option to trade in Saudi Arabian equities following the debut of two exchange traded funds in Shanghai and Shenzhen, as the two countries deepen their financial ties.
Two ETFs focused on Saudi Arabain equities debuted today in Shenzhen and Shanghai in China.
The China Southern Asset Management CSOP Saudi Arabia ETF QDII is listed in Shenzhen, and the Hautai-Pinebridge CSOP Saudi Arabia ETF QDII is trading in Shanghai. According to Bloomberg, both the Shenzhen and Shanghai listings, which raised $87 million and $81.2 million respectively, traded close to their listing prices as of 10.20am local time, following their debut.
The ETFs will invest in Saudi equities through the CSOP Saudi Arabia ETF that launched in Hong Kong in November last year with an initial investment of $1 billion, making it the first exchange traded product in Asia Pacific tracking the Saudi Arabian market. Backed by the Public Investment Fund (PIF) of Saudi, the ETF covers sectors including financials, basic materials, energy, and telecommunications.
State-backed institutions from the GCC have been bidding on Asian capital markets as favourable government policies draw the interest of sovereign funds and high-profile investors.
HSBC, which acted as the ETF partner for the master fund listed in Hong Kong, said structures such as ETF listings are opening new routes of capital into Saudi Arabia, supporting the growth of its equity capital market at pace and in scale.
“Connecting Saudi Arabia, the Middle East’s largest economy, to China, Asia’s largest investor base, will drive further liquidity in the Kingdom and illustrates the rapid momentum in this important investment corridor,” said Faris AlGhannam, CEO, HSBC Saudi Arabia.
(Reporting by Bindu Rai, editing by Seban Scaria)
