The Clap
Michael Wong, Deputy Financial Secretary of the Hong Kong Special Administrative Region Government, revealed that Hong Kong and Saudi Arabia are considering establishing an Exchange Traded Fund (ETF) that tracks the region’s indices.
Expected Cooperation
Wong stated that his government is currently collaborating with several financial institutions to develop the ETF.
Once the fund is ready, it will be listed on the Riyadh Stock Exchange. This will help Middle Eastern investors benefit from profits and capital growth in China and Hong Kong.
This was revealed during the first global edition of the Financial Markets Forum in Hong Kong.
The forum was organized by Tadawul Group, the owner of the Saudi stock exchange, and Hong Kong Exchanges and Clearing Limited. Both sides aim to enhance their positions as financial centers.
Saudi Arabia is also working to attract more foreign capital to its financial market.
This comes as Crown Prince Mohammed bin Salman works to diversify the economy under the ambitious Vision 2030 plan.
So What
In recent years, Hong Kong has been keen on engaging with the Middle East, including Saudi Arabia, to strengthen relations and increase investment opportunities amid ongoing tensions between China and Western countries.
Last year saw the listing of a new ETF tracking Saudi stocks in Hong Kong, making it the “first of its kind” in Asia.
Some Context
Michael Wong pointed to ongoing negotiations to sign an official agreement aimed at enhancing and protecting investment between the two countries.
The Hong Kong government is also considering opening an office specializing in economic and trade affairs in Riyadh.
He also added that the China Securities Regulatory Commission has approved a series of measures aimed at enabling investors to access both markets.
This will facilitate Saudi companies’ access to Chinese capital.
Now What
Mohammed Al Rumaih, CEO of the Saudi Stock Exchange “Tadawul,” stated in an interview with Bloomberg that more than 10 companies are ready to conduct their initial public offerings (IPOs) on the local stock exchange.
In addition, more than 50 companies have applied for listing, reflecting the continued wave of IPO activity in the Kingdom.
Riyadh has seen the announcement of four companies’ offerings in recent weeks, including Fakeeh Care Group, which is set to be the largest IPO in the Kingdom in 2024 so far.
This IPO was covered in less than an hour, aiming to raise about 2.9 billion riyals ($763 million), surpassing the total local listings since the beginning of the year.
It is worth mentioning that IPOs in Saudi Arabia raised around $700 million since the beginning of the year.
The offering of Modern Mills Company garnered the largest share of these offerings, raising $314 million in March last year.
The size of the offerings represents a significant increase compared to the same period last year when listings stopped due to a decline in the Saudi stock market.
The main index of the stock exchange has risen by 4% since the beginning of the year.
