The first exchange-traded fund tracking Saudi Arabian shares debuted today in Hong Kong, marking the largest of its type to trade in the city this year and underscoring efforts by the Middle Eastern country and the Asian financial hub to build closer ties.
The CSOP Saudi Arabia ETF, domiciled in Hong Kong, is Asia’s first to focus on shares listed in Riyadh. It has more than $1 billion in assets and counts Saudi Arabia’s sovereign fund as a top investor.
Hong Kong last month announced steps to boost investor activity to counter a slump in average trading volume. While a 14% slide puts the Hang Seng Index on course for a fourth consecutive year of losses, the volume of shares traded in Riyadh has risen and a 6% gain in its main equities gauge in 2023 is outperforming emerging market peers.
“The Saudi market is expected to more than double by 2030. There is a lot of interest in this market,” said Rebecca Sin, an analyst at Bloomberg Intelligence in Hong Kong. Apart from having oil giant Saudi Aramco as the second-biggest holding, the fund is “very financial heavy,” a group favored by Hong Kong investors, she added.
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