Middle Eastern traders will soon be able to invest in Hong Kong stocks through two exchange-traded funds (ETFs) that track the city’s benchmarks once they list on the Saudi stock exchange at the end of this month.
Finance Minister Paul Chan Mo-po will lead a delegation of dozens of local regulators and financiers to the FII conference in Riyadh and the launch of the ETFs, said Julia Leung Fung-yee, CEO of the Securities and Futures Commission (SFC). ).
“The two ETFs tracking Hong Kong stocks to be listed on the Saudi Stock Exchange will mark an important milestone in the link between Hong Kong and Saudi Arabia’s capital markets,” Leung said in an interview on Friday.
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She visited Saudi Arabia in June to meet officials and discuss the possible listing of ETFs on each other’s exchanges. Saudi Exchange, or Tadawul, is the largest market in the Middle East, with a capitalization of 10 trillion riyals ($2.6 trillion).
An ETF is an investment instrument that works as a combination of mutual funds and stocks, allowing individual and institutional investors to trade these instruments in an easy and convenient way.
The Capital Markets Authority of Saudi Arabia said on September 17 that it had approved local asset manager AlBilad Investment’s request to list “Albilad CSOP MSCI Hong Kong China Equity ETF” units on Tadawul. The regulator did not reveal the fund’s launch schedule.
Leung said another ETF is also on the way, which would track a key benchmark in Hong Kong. She did not provide further details.
Two sources told the Post that the second ETF would track the Hang Seng benchmark index and include Hang Seng Bank. Hang Seng Bank declined to comment.
SFC CEO Julia Leung and current and former chairmen of Hong Kong’s market regulator will attend an event on Thursday to mark the SFC’s 35th anniversary. Photo: SFC alt=SFC CEO Julia Leung and current and former chairmen of Hong Kong’s market regulator attend an event on Thursday to mark the SFC’s 35th anniversary. Photo: SFC>
Ties between Hong Kong and Saudi Arabia have strengthened since the first Saudi ETF listed in the city last November. The CSOP Saudi Arabia ETF, the first in Asia to track the Middle East’s largest companies including Saudi Aramco, is up 5 percent since launch.
“While the SFC will continue to expand its many connect programs with mainland China, the regulator will continue to work with other regulators in the Middle East and Southeast Asia to build more cross-border collaborations to enhance Hong Kong’s role as an international strengthen the financial center. Leung said.
The SFC will continue to promote fintech and regulations for virtual asset trading in the future, she added.
Last month, Hong Kong dethroned Singapore to become Asia’s top financial center for the first time in two years, with a strong stock market and new listings boosting the city, according to the biannual Global Financial Centers Index.
The SFC, which turned 35 in May, hosted a celebration on Oct. 3 that brought together seven current and former chairmen: first head Robert Owen, Robert Nottle, Anthony Neoh, Andrew Sheng, Eddy Fong, Carlson Tong and incumbent Tim Lui.
The commission was established in 1989, two years after the Black Monday stock market crash, as an independent regulator to ensure the quality of the market and intermediaries, including brokers and fund managers, and to enforce rules to protect investors.
The SFC’s responsibility has grown in recent years. These include promoting the various connect programs and regulating virtual assets, which Leung said will remain the focus in the coming years.
“An important mission of the SFC is to protect the interests of investors and maintain the quality of the Hong Kong stock market. This mission will continue,” she said.
Hong Kong’s stock market has come a long way since the SFC’s inception. The number of listed companies has increased tenfold from 298 in 1989 to 2,611, while the market capitalization has increased thirtyfold to HK$30 trillion (US$3.8 trillion).
The city has also been the world’s largest IPO stock exchange seven times between 2009 and 2019, thanks in part to the SFC’s strict supervision that has significantly improved the quality of the market.
Another important contribution of the SFC is to promote the asset management industry. The number of Hong Kong-domiciled funds has risen from 157 in 1989 to 926 currently, while the net asset value of all SFC-authorized funds has risen 49 times to US$1.76 trillion over the same period, according to SFC data.
“Over the past 35 years, the SFC has led the markets in dealing with major financial crises, including the 1998 Asian Financial Crisis and the 2008 Global Financial Crisis,” Leung said.
‘The market has ups and downs, but the most important thing is that the trading and clearing systems continue to operate smoothly in these volatile times.
“Times have changed, but the mission of the SFC has not. The SFC will continue to protect the interests of retail investors and strengthen Hong Kong’s status as an international financial center.”
This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice covering China and Asia for more than a century. For more SCMP stories, explore the SCMP app or visit the SCMP Facebook page Tweet pages. Copyright © 2024 South China Morning Post Publishers Ltd. All rights reserved.
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