#Saudi Arabian ETF Tracking Chinese Stocks Raises $1.3 Billion - Bloomberg

Saudi Arabian ETF Tracking Chinese Stocks Raises $1.3 Billion - Bloomberg

A Saudi Arabian investment firm will soon launch the country’s largest exchange traded fund to track Hong Kong-listed Chinese stocks, the latest sign of closer financial ties between China and the oil-rich kingdom.

The securities arm of Bank Albilad raised HK$10 billion ($1.3 billion) for its Albilad CSOP MSCI Hong Kong China ETF as of Wednesday, according to the social media account of the fund’s Chinese partner. The fund is bigger than any of its peers listed on the Saudi Arabian exchange, according to data compiled by Bloomberg. It will start trading next Wednesday.

The ETF will provide easier access in local currency to investors seeking exposure to Chinese stocks, and comes amid signs of growing ties between Beijing and Riyadh. Another ETF tracking Hong Kong-listed stocks is set for launch before year-end by Saudi Awwal Bank, one of the country’s biggest lenders.

The ETF will invest in Chinese equities through the Hong Kong-domiciled CSOP MSCI HK China Connect Select ETF, which counts e-commerce firm Meituan and sportswear maker Anta Sports Products Ltd. among its biggest holdings. The feeder fund has fully built positions via the master fund, a spokesperson at CSOP told Bloomberg news.

The amount raised is significantly more than the expected $400 million. Its size has eclipsed the combined market value of all nine ETFs trading in Saudi Arabia, including two that invest in US stocks, data compiled by Bloomberg show.

The strong subscription follows Beijing’s stimulus bonanza, which triggered a surge in Chinese equities last month. While the rally has pared some gains, investors are keenly awaiting stronger policy support steps, such as ramped-up fiscal spending. The Hang Seng China Enterprises Index, which tracks China’s biggest companies listed in Hong Kong, is still up more than 23% since a low in September.

The ETF marks another step for Beijing to strengthen ties with Gulf nations amid tensions with the West, and as Saudi investors step up their presence in Asia. Last year, the first ETF tracking Saudi stocks debuted in Hong Kong after raising more than $1 billion. In July, two ETFs focused on Saudi Arabian stocks were launched in China and surged on trading debut.