Hong Kong's SFC explores cross-listings of ETFs with Saudi Arabia

The SFC's CEO Julia Leung recently visited the head of Saudi Arabia's Capital Market Authority and Saudi Exchange's CEO, while Saudi Aramco has launched a secondary offering.

Hong Kong is continuing to increase ties with Saudi Arabia in the financial sector as Middle Eastern and Asian economies move closer together. 

Within the last week, Julia Leung, Hong Kong’s Securities and Futures Commission’s (SFC) chief executive officer, and Christina Choi, SFC's executive director of investment products, have been on a recent Middle East business trip to meet the head of the Saudi Arabia’s Capital Market Authority (CMA) and senior executives of Saudi Tadawul Group (parent company of the Saudi Exchange) in Riyadh.

During separate meetings with the CMA’s chairman Mohammed bin Abdullah Elkuwaiz and its commissioner Abdulaziz Abdulohsen Bin Hasan and a group of executives from Saudi Tadawul Group including Mohammed Al Rumaih, CEO of the Saudi Exchange, the parties discussed how to strengthen collaboration in financial services between the Hong Kong SAR and Saudi Arabia.

They also explored a potential supervisory Memorandum of Understanding (MoU) and exchanged views on "a range of issues of mutual interest, including facilitative measures related to cross-listing of exchange traded funds (ETF) in both capital markets", according to a SFC June 3 media release.

Last year, the HKEX became the first exchange to offer a listed ETF in Asia Pacific for stocks listed in Saudi Arabia.

Showing some of the potential opportunities for invesors, this week Saudi's largest firm Saudi Aramco launched a secondary offering on the Saudi Exchange of 154.5 million shares, or 10% of the firm's share capital. It could raise around  $12 billion for the oil group. 

In another move by the the SFC delegation, Leung and Choi took part in a roundtable with leading local asset managers and financial institutions in Riyadh. They discussed the regulatory and market landscape in Hong Kong, including the state of affairs and opportunities of the asset and wealth management sector. 

The meetings followed the first international Capital Markets Forum in Hong Kong on May 9, which was co-organised by Saudi Tadawul Group and the Hong Kong Stock Exchange (HKEX). 

Meanwhile, the Chinese government has been encouraging Hong Kong’s flagship carrier Cathay Pacific to open up more routes to the Middle East – something it may struggle with as it suffers from staff shortages.

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