Saudi's first China-focused ETF to become the largest in Middle East

Techtronic Industries Co

29/10/2024 10:40

By Summer Zhen
       HONG KONG, Oct 29 (Reuters) - Saudi Arabia's first
exchange-traded funds (ETFs) that track Hong Kong-listed shares,
mainly Chinese firms, are expected to be the largest such funds
in the Middle East.
    Trading of the product, which kicks off on Wednesday on the
Saudi Stock Exchange, has raised more than $1.2 billion at the
start, issuer Albilad Capital and its partner Hong Kong's CSOP
Asset Management said.
    The initial size will surpass the current largest Islamic
ETF - Al Rayan Qatar ETF - listed on the Qatar Exchange, LSEG
data shows.
    As ties grow between Arab countries and Beijing and Hong
Kong, the ETFs open doors for Middle East investors to gain easy
access to capital markets in the world's second largest economy.
    The Albilad CSOP MSCI Hong Kong China Equity ETF is
sharia-compliant, CSOP said, adding that it invests in 30 stocks
through a Hong Kong-listed ETF tracking the MSCI HK China
Connect Select Index  3432.HK . 
    The top three holdings are delivery platform Meituan
 3690.HK , power tools maker Techtronic Industries  0669.HK  and
sportswear maker Anta Sports  2020.HK .
    The product "opens a new avenue for investors to engage with
the dynamic growth of China through Hong Kong, all while
adhering to Sharia principles," said Zaid AlMufarih, the chief
executive of Albilad Capital. 
    Another ETF that tracks Hong Kong stocks, SAB Invest Hang
Seng Hong Kong ETF, will be launched on Thursday by SAB Invest,
an arm of Saudi Awwal Bank. 
    "At a time when Chinese markets have underperformed in
recent years, this launch signals potential for value,
particularly for investors in the MENA region, who are prepared
to look past geopolitical friction," said Gary Dugan, chief
executive of the Global CIO Office, based in Dubai. 
    The MSCI HK China Connect Select Index  .MIHKCHCOSNHK 
rebounded sharply in September and is up 12% for the first nine
months amid a raft of stimulus policy measures by the Chinese
government to boost the economy, but saw an annualised loss of
17.9% for the past three years. 
    Last November, Hong Kong launched Asia's first ETF tracking
Saudi equities - CSOP Saudi Arabia ETF  2830.HK  - and has been
actively seeking cross-listing opportunities in both capital
markets.
    Hong Kong's financial secretary, Paul Chan Mo-po, led a
delegation from the financial and innovation and technology
sectors to visit the Saudi Arabian capital of Riyadh this week
to attract new sources of capital. 
    The listing of Hong Kong ETFs in the Saudi market creates a
win-win situation for both sides, Chan said.

 (Reporting by Summer Zhen; Editing by Clarence Fernandez)
 ((summer.zhen@thomsonreuters.com; 852-3462-7739;))