Saudi Arabia and China Strengthen Financial Connectivity with New ETFs
In a groundbreaking move, Public Investment Fund Governor Yasir Al-Rumayyan announced the launch of exchange-traded funds on Chinese bourses, marking a new era of connectivity between Saudi Arabia and China’s financial markets.
Asian Investors Gain Access to Saudi Equity Market
At the listing event in Shenzhen, Al-Rumayyan emphasized the significance of the ETF in providing investors in Asia with access to the Saudi equity market. This access allows them to tap into the Kingdom’s sustainable long-term growth driven by strategic economic transformation.
Debut of New ETFs in Shanghai and Shenzhen
Two new ETFs focused on the Kingdom’s stocks made their debut in Shanghai and Shenzhen last week. Operating under the Qualified Domestic Institutional Investor program, these feeder funds began trading on July 16, with both experiencing a surge and hitting the 10 percent daily limit on their launch day.
China Southern Asset Management Leads the Way
The CSOP Saudi Arabia ETF QDII, managed by China Southern Asset Management, raised 634 million Chinese yuan and is listed on the Shenzhen Stock Exchange. Additionally, the Huatai-PineBridge managed CSOP Saudi Arabia ETF QDII, which raised 590 million Chinese yuan, started trading on the Shanghai Stock Exchange.
Attracting Foreign Investors and Deepening Capital Inflows
PIF aims to attract foreign investors and deepen capital inflows into Saudi Arabia, building on the success of the CSOP Saudi Arabia ETF introduced on the Hong Kong Stock Exchange. This move, which included a $500 million contribution from PIF, became the world’s largest Saudi Arabian ETF with an initial investment exceeding $1 billion.
Diversifying Portfolios and Driving Market Growth
According to Abdulmajeed Al-Hagbani, Head of Securities Investments at PIF, the ETFs cater to the needs of international stakeholders by enabling them to diversify their portfolios within the Saudi market. The focus on attracting new investors underscores the importance of a diversified investor base in driving the market’s growth.
New Opportunities for Chinese Stakeholders
These developments offer Chinese stakeholders new opportunities to invest in the Middle East’s largest market, establishing a bridge for greater access to one of the world’s fastest-growing and most strategic markets. Over time, these initiatives are expected to benefit individual investors in Saudi Arabia as well.