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Saudi Arabia’s first change traded funds investing in Hong Kong’s equities market can be listed on the native inventory change earlier than the top of the yr, as authorities attempt to strengthen monetary ties between the 2 markets.
In a speech on the Bund Summit in Shanghai, Paul Chan, Hong Kong’s monetary secretary, confirmed that the federal government is anticipating “some reciprocal strikes” to happen this yr, which is able to embody the itemizing of a pair of Hong Kong-focused ETFs on the Saudi Change.
The primary ETF investing solely in Saudi Arabia’s equities market was listed on the Hong Kong change on the finish of November final yr, attracting $1bn in preliminary funding primarily from institutional traders.
The CSOP Saudi Arabia ETF, which tracks the FTSE Saudi Arabia Index and is the primary such ETF with single-country publicity to the Saudi market wherever in Asia Pacific, has seen its property tick as much as $1.25bn since launch.
This text was beforehand revealed by Ignites Asia, a title owned by the FT Group.
“CSOP is finest positioned to record a feeder fund for its Hong Kong ETFs in Saudi Arabia within the second half of 2024,” stated Rebecca Sin, a Hong Kong-based senior ETF analysis analyst at Bloomberg Intelligence.
In July, CSOP listed in Hong Kong the primary sharia-compliant ETF in Better China, the CSOP MSCI HK China Join Choose ETF.
The fund affords traders publicity to Hong Kong-listed H shares and mainland China A-shares by monitoring an index of the 30 greatest securities within the MSCI China and MSCI Hong Kong indices which might be accessible through the Southbound Inventory Join programme.
The index adheres to sharia funding rules by excluding enterprise categorised in round 30 industries together with livestock, dairy farms, meat packing, searching, packaged frozen meals and alcoholic drinks.
On condition that each mainland Chinese language regulators and the Hong Kong authorities have expressed curiosity in itemizing ETF merchandise on the Saudi Arabian bourse, Sin stated the CSOP MSCI HK China Join Choose fund “might match the invoice”.
“CSOP might both accomplice up with a neighborhood fund supervisor or apply for a fund licence straight,” famous Sin, however she stated the latter could be “unlikely and price prohibitive” for a Hong Kong-based fund home.
Sin stated a Hong Kong ETF listed in Saudi Arabia might hope to draw as much as $100mn in property, with the participation of huge institutional traders such because the Public Funding Fund of Saudi Arabia, the nation’s sovereign wealth fund.
There are at present solely 9 ETFs with a complete of $56mn in property listed on the Saudi Arabian bourse.
The Saudi change has been transferring shortly to focus on Asian markets as a supply of better funding to develop its capital markets.
Michael Wong Wai-lun, deputy monetary secretary of Hong Kong, stated in Could that town was collaborating with Saudi Arabia officers and native monetary establishments to launch an ETF monitoring home inventory indices to strengthen two-way capital flows between the 2 markets.
*Ignites Asia is a information service revealed by FT Specialist for professionals working within the asset administration trade. Trials and subscriptions can be found at ignitesasia.com