As per the recent disclosure by the Saudi Stock Exchange (Tadawul), the Albilad CSOP MSCI Hong Kong China ETF, forged through a collaboration between Saudi Albilad Capital and China Southern Asset Management Co., Ltd. (CSOP), is scheduled for listing on the Saudi Exchange on October 30, 2024. This debut signifies the inaugural ETF in the Middle East to monitor the Hong Kong stock market, emblematic of a substantial stride in financial market synergy between China and Saudi Arabia.

The lion's share, ninety-five percent, of the capital from the Albilad CSOP MSCI Hong Kong China ETF will be channeled into the Southern Asset Management MSCI Hong Kong Stock Connect Select ETF (03432.HK), tracing the MSCI Hong Kong Stock Connect Select Index. This index encapsulates top-tier Chinese listed entities in the Hong Kong market, with its top ten holdings encompassing corporations like CRRC, Xiaomi Group, Meituan, China Shenhua Energy, Anta Sports, BeiGene, Haier Smart Home, Nongfu Spring, Shenzhou International, and Sinopharm Group, spanning diverse sectors such as technology, consumer goods, and energy. Forecasts anticipate the fund's magnitude to surpass 10 billion Hong Kong dollars, furnishing Saudi and Middle Eastern investors with a direct avenue to partake in China's economic upsurge.

This endeavor comes against the backdrop of the escalating deepening of economic and trade collaboration between China and Saudi Arabia. In recent times, the partnership between China and Saudi Arabia in energy, infrastructure, technology, and other domains has been on a trajectory of reinforcement, notably within the capital market realm. The establishment of a comprehensive strategic partnership between China and Saudi Arabia in 2022 set the stage for financial market cooperation between both nations. In July of the current year, Huatai-PineBridge and Southern Fund launched the initial tranche of two cross-listed Saudi ETF funds in mainland China, garnering favor among market participants upon their primary listing on the Shanghai and Shenzhen Stock Exchanges. Data indicates that bilateral trade volume between China and Saudi Arabia reached 87.9 billion US dollars in the initial three quarters of 2024, reflecting an 11.2% year-on-year upswing. Saudi Arabia has maintained its status as China's principal trading partner in the Middle East for three successive years.

The Chief Executive Officer of Albilad Capital affirmed that the rollout of this ETF stands as a momentous initiative in alignment with Saudi Arabia's "2030 Vision," aimed at diversifying the financial market. The CEO of CSOP Asset Management Company supplemented that the introduction of this offering will furnish Middle Eastern investors with a more streamlined route to engage in the Chinese capital market, thereby fostering mutual interconnection between the financial markets of the two regions.

Market analysts posit that the debut of this ETF transpires amidst the backdrop of the sustained recovery of the Chinese economy and historic lows in Hong Kong stock valuations, potentially drawing increased investor interest from the Gulf region towards the Chinese market. Furthermore, this attests to overseas investors' optimism regarding the long-term growth prospects of the Chinese economy.

It is noteworthy that this strategic move follows a heightened allocation by Saudi investors into the Chinese capital market subsequent to the augmentation of holdings of Chinese stocks by the Saudi sovereign wealth fund in July of the present year. With the escalating demand in the Middle East region for Chinese assets, the prospect of introducing akin investment products looms on the horizon.