China Approves First Exchange-Traded Funds Investing in Saudi Arabia Equities
In a move to deepen ties with the Middle East amidst tensions with the West, China has approved its first exchange-traded funds investing in Saudi Arabia equities. Fund managers confirmed to Reuters that the products, managed by China’s Huatai-Pinebridge Investments and Southern Asset Management, will track the Hong Kong-listed CSOP Saudi Arabia ETF.
Deepening Cooperation in Capital Markets
According to the two fund managers, the approval of these ETFs will further deepen the cooperation between Saudi Arabia and China in capital markets. The CSOP Saudi Arabia ETF, which tracks the FTSE Saudi Arabia Index, has seen a 5 percent decline this year compared to a 3 percent gain in China’s stock benchmark CSI 300.
Expanding Financial Ties
China and Saudi Arabia’s stock exchanges have been in talks about allowing ETFs to list on each other’s bourses to deepen financial ties amidst warming diplomatic relations. Through the ETF, Chinese investors will have access to trade Saudi stocks including the oil giant Saudi Aramco and Saudi National Bank.
China’s Diplomatic Push
China’s frustration with Washington’s economic policies has led to a diplomatic push to expand ties with countries in Europe, the Middle East, and Africa. The move also includes efforts to court US ally Saudi Arabia to strengthen relations.
Welcoming Foreign Investment
China’s securities regulator recently stated that it welcomes foreign financial institutions and investors, including those from the Middle East, to expand their investment in China. This comes in response to news of Qatar’s sovereign wealth fund buying a 10 percent stake in China Asset Management Co., the country’s second biggest mutual fund company.