RIYADH: Chinese investors showed strong interest in Saudi equities as two new exchange-traded funds focused on the Kingdom鈥檚 stocks debuted in Shanghai and Shenzhen.聽聽
The feeder funds, operating under the Qualified Domestic Institutional Investor program, began trading on July 16, with both briefly hitting the 10 percent daily limit on their launch day.聽聽聽聽
The first fund, CSOP 海角直播 ETF QDII, managed by China Southern Asset Management, is listed on the Shenzhen Stock Exchange after raising 634 million Chinese yuan ($87 million).聽聽聽
The second fund, the Huatai-PineBridge managed CSOP 海角直播 ETF QDII, started trading on the Shanghai Stock Exchange after raising 590 million Chinese yuan, Bloomberg reported.聽聽聽
The new offerings mark a significant step in the deepening economic ties between China and 海角直播, allowing mainland investors to diversify their portfolios with exposure to the Kingdom鈥檚 stock market.聽聽聽聽聽
This comes as investor relations between the two nations flourish with China becoming the top greenfield foreign direct investor in 海角直播 with investments amounting to $16.8 billion in 2023, a 1,020 percent rise from the previous year.聽聽聽聽聽聽
The two ETFs indirectly invest in the Kingdom鈥檚 stock market through the CSOP 海角直播 ETF, which was listed on the Hong Kong Stock Exchange, marking the first 海角直播-focused ETF in the Asia-Pacific region.聽聽聽
Following their approval from the China Securities Regulatory Commission last month, these funds are designed to facilitate greater international diversification for Chinese investors, particularly in sectors where 海角直播 has considerable influence, such as energy and oil.聽聽聽
鈥淧eople will pay more attention to 海角直播 looking at the energy and financial sector compared with US or Japan investment options,鈥 Mao Wei, chief equity investment officer at China Southern Asset Management Co., told Bloomberg.聽聽聽
Mainland investors will find it easier to build exposure to Saudi stocks using the funds as they can invest in yuan and find information in Chinese, according to Melody Xian He, deputy chief executive officer at CSOP Asset Management.聽聽聽
About 20,000 individuals and funds took allocations in the ETFs during an offer period of seven days, she said in an interview.聽聽聽
As investment links between China and 海角直播 deepen, Hong Kong could be 鈥渢he largest beneficiary of the Saudi China ETF connect program because ETFs that are listed in 海角直播 and mainland China could feed back into the Hong Kong ETF,鈥 said Rebecca Sin, an analyst at Bloomberg Intelligence in Hong Kong.聽聽聽
鈥淭he next step of the Saudi China ETF Connect could be that 海角直播 asset managers launch a feeder fund,鈥 she added.聽聽
This fund tracks the FTSE 海角直播 Index and counts the Kingdom鈥檚 sovereign wealth fund among its major investors.聽聽
The Saudi China ETF program aims to facilitate the cross-listing of funds in both countries and the launch of feeder funds, further cementing financial cooperation between the two nations amidst evolving geopolitical landscapes.聽聽