Imagine a world where economic collaboration knows no boundaries; that’s precisely the vision unfolding as Hong Kong and Saudi Arabia forge an unprecedented partnership. In a groundbreaking move, Hong Kong is developing an exchange-traded fund (ETF) in cooperation with Saudi Arabia, designed to track Hong Kong’s local stock indices. This initiative is a testament to the growing synergy between these two dynamic economies.
Michael Wong, the Deputy Financial Secretary of Hong Kong, recently announced this ambitious plan at the Capital Market Forum in Hong Kong. He emphasized the strategic importance of establishing a trade base in Riyadh, which aims to strengthen economic ties not only with Saudi Arabia but also with mainland China.
The Rise of Saudi-Hong Kong Economic Ties
Wong shared, “We are collaborating with several financial institutions to list an ETF in the Middle East that tracks Hong Kong’s stock indices. Additionally, the Hong Kong government is exploring the possibility of setting up an economic and trade office in Riyadh.” This venture follows Hong Kong’s successful launch of an ETF in November 2023 that tracks the Saudi Arabia Index.
In a further boost to connectivity, Cathay Pacific Airways is set to launch flights from Hong Kong to Riyadh by the end of 2024, significantly reducing travel time to just six hours. Wong expressed optimism, stating, “The friendship and partnership between Hong Kong and Saudi Arabia will stand the test of time.”
At the event’s opening ceremony, Khalid Al-Hussan, CEO of Saudi Tadawul Group, highlighted the significance of the Capital Market Forum as a symbol of deepening connections between the two nations. The forum attracted over 1,000 investors, listed companies, and financial leaders, all eager to explore the evolving market landscape.
Al-Hussan remarked, “This forum serves as a crucial bridge for investors from Hong Kong and mainland China to connect directly with Saudi issuers, enhancing financial bonds and synergies between two of the most promising and rapidly evolving markets.”
Saudi Arabia’s Vision 2030: A Transformative Journey
Saudi Arabia’s commitment to economic transformation through Vision 2030 has led to significant changes in its stock exchange and capital markets. Al-Hussan noted that the average daily trading volume in Saudi Arabia’s stock exchange has doubled over the past two years, reaching approximately $2.3 billion daily in the first quarter of this year.
Abdulaziz bin Hassan, a board member of Saudi Arabia’s Capital Market Authority, highlighted the Kingdom’s remarkable transformation, with its market now ranked among the top 10 globally in terms of market capitalization. The surge in initial public offerings and rapid asset management growth underscores the market’s attractiveness.
Bonnie Y Chan, CEO of Hong Kong Exchanges and Clearing Ltd, acknowledged Saudi Arabia’s steady progress in economic diversification, emphasizing the potential it holds for investors. “China and Saudi Arabia are both undergoing fantastic economic transformations, offering very interesting opportunities,” she noted.
Ambitious Targets for the Future
Saleh Al-Khabti, Saudi Arabia’s Deputy Minister of Investment Transactions, revealed the Kingdom’s ambitious target for fixed capital formation exceeding $3 trillion. “We are proud of our achievements so far and are determined to capture investor interest,” he stated.
Al-Khabti highlighted Saudi Arabia’s robust economic growth, with non-oil sector growth reaching 4.4 percent. He also emphasized the Kingdom’s commitment to openness and integration with global markets, inviting investment from Chinese firms in sectors such as automobiles, mining, technology, and tourism.
Al-Khabti concluded with a call to action, “Invest in Saudi Arabia and be part of our journey. We have exceeded our tourism target of 100 million visitors by 2030, reaching it last year. Our new target is 150 million visitors by 2030, and we welcome your participation.”
