Riyadh: The Saudi financial market has undergone a significant transformation since the launch of Saudi Vision 2030. The initiatives, programs, and regulatory reforms associated with Vision 2030 have encouraged international investors, index providers, and financial institutions to join the Saudi market.

The Public Investment Fund (PIF) has worked to achieve the objectives of Saudi Vision 2030 by implementing mechanisms that enhance the pace of attracting foreign investments to the Kingdom. This includes stimulating international investors, particularly Asian investors, to invest in the Saudi financial market. One notable development is the listing of the first batch of exchange-traded funds (ETFs) in the Saudi market, such as the Saudi China Southern CSOP Fund and the Saudi Huatai-PineBridge CSOP Fund on the Shenzhen and Shanghai stock exchanges in China.

During the announcement of the listing on the Shenzhen Stock Exchange, PIF Governor Al-Rumayyan Yasir stressed that these listings are an important step toward enhancing communication among the financial markets of Saudi Arabia and China. They will provide Asian investors with the opportunity to access the Saudi financial market and observe its sustainable growth driven by the Kingdom's economic transformation.

These two new funds are part of the first batch of ETFs in China capable of investing in the Saudi financial market. They rely on the model known as listed ETFs, which allow investors to track the FTSE Saudi Arabia Index and invest in the largest market in the Middle East. This enables investors to gain greater access to one of the fastest-growing and most strategic markets in the world and observe the performance of 56 leading large and medium-cap companies listed on the Saudi stock exchange (Tadawul).

The new listing comes as part of the efforts initiated by the PIF to enhance investment flows into the Saudi Arabian capital market. In November 2023, the CSOP Saudi Arabia ETF was listed on the Hong Kong Stock Exchange with an initial fundraising of SAR 3.75 billion (US$1 billion), including around SAR 1.87 billion (US$500 million) from the PIF. This fund, managed by CSOP Asset Management in collaboration with the PIF, is the first exchange-traded fund investing in the Saudi Arabian capital market in East Asia.

This move has made investing in the Saudi Arabian capital market more attractive, connecting it with one of the most important global financial hubs. Thus, the step has provided a wide range of Asian and international investors with the opportunity to track the Saudi financial market’s growing performance and diversify their investment portfolios by investing in Saudi stocks.

ETFs aim to enhance capital flows and integration across different markets, linking international markets with the Saudi Arabian capital market while also promoting financial innovation.

The listing of ETFs on Asian exchanges in Hong Kong, Shenzhen, and Shanghai positively impacts stock prices in the Saudi Arabian market, enhances financial liquidity, and benefits local investors who own these stocks. This aligns with the PIF’s investment strategy to attract foreign investment, boost investment flows into the Saudi Arabian capital market, and enable Saudi companies and investors to grow and achieve their aspirations. The PIF is committed to enhancing the investment competitiveness of the Kingdom by incentivizing global investment managers to enter the Saudi market and diversify the available investment mechanisms for international funders.

Head of MENA Securities Investments at the PIF Alhagbani Abdulmajeed stated that the main objective of launching ETFs is to meet the needs of international investors, providing them with the opportunity to diversify their investment portfolios through investing in the Saudi market. This contributes to enhancing the activity of the Saudi Arabian capital market, increasing its attractiveness to foreign investments, and benefiting local companies and investors.

The launch of ETFs in Asian markets comes at a time when there were no available instruments for investors to track Saudi Arabian stocks. This serves as a significant milestone for the PIF within its strategy to deepen its global strategic partnerships by facilitating new investment opportunities between the capital markets in Hong Kong and Saudi Arabia, further developing and enhancing the competitiveness of the local capital market.

The PIF focuses on its presence through its subsidiary offices in major investment destinations worldwide, which enables access to global markets, better understanding of international economies and companies, and exploration of additional investment opportunities. As a result, the Saudi Exchange Tadawul has seen increased attractiveness to international investors in recent times, due to its strong performance and inclusion in major global indices, including the MSCI Emerging Markets Index.

During the announcement of the listing process on the Shenzhen Stock Exchange, PIF Governor Al-Rumayyan Yasir emphasized that the listing operations are an important step toward enhancing communication between the financial markets in Saudi Arabia and China. He added that these operations will provide Asian investors with the opportunity to access the Saudi Arabian capital market and observe its sustainable growth driven by the economic transformation in the Kingdom.