[HONG KONG] Hong Kong and Saudi Arabia are ramping up efforts to boost trading activity as inflows to their exchange-traded funds (ETFs) wane and cross-listings fail to materialise.
Hong Kong Exchanges & Clearing (HKEX) chief executive officer Bonnie Chan and Mohammed Al-Rumaih, her counterpart at the Tadawul stock exchange, are poised to address the co-hosted Capital Markets Forum in Hong Kong on Thursday (May 29). The city’s financial secretary Paul Chan and Securities and Futures Commission head Julia Leung will also speak.
Hong Kong and Riyadh have strengthened relations in recent years, as the Asian city seeks to attract rich Gulf families and diversify its investor pool. Meanwhile, the oil-rich kingdom has worked to raise foreign ownership and pump liquidity in publicly traded stocks under its Vision 2030 agenda, with Chinese investors seen as central to that plan.
An ETF tracking bonds issued by the Saudi government is set to start trading in Hong Kong on Thursday. It’s the latest offering to join a slew of ETFs tracking Saudi and Chinese shares that have been listed in Hong Kong, Shenzhen, Shanghai and Riyadh since 2023, though trading volumes and inflows have remained slim since their debut.
“There seems to be limited organic and natural demand for these products, despite their strong performance, as most the assets under management seems to have come at inception with cornerstone investors including Saudi Arabia’s Public Investment Fund and the Hong Kong Monetary Authority,” said Bloomberg Intelligence analyst Rebecca Sin.
HK’s recovery versus Saudi underperformance
HKEX announced in October that it planned to open an office in the Saudi capital in 2025 as it sought to promote “greater connectivity between China and the Gulf region,” according to a statement. That same month, Hong Kong’s flagship carrier Cathay Pacific Airways started operating three return flights per week between the city and Riyadh.
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Hong Kong’s equity market has recovered sharply since chief executive John Lee’s visit to the Gulf in early 2023, as Beijing seeks to reinforce the city as a funding hub for its companies. Major new share sales returned to the HKEX this year after a lacklustre period, mostly boosted by offerings from big Chinese firms that are already listed in the mainland.
Earlier this month, electric-vehicle batteries giant Contemporary Amperex Technology Co Limited raised US$5.3 billion in Hong Kong following the world’s largest listing of 2025. Total proceeds raised through equities sales in the city have already reached the highest for a full year since 2021.
Hong Kong’s benchmark Hang Seng Index is up 16 per cent this year, one of the best performers globally, contrasting with a drop of about 8 per cent for the Tadawul All Share Index. A memorandum of understanding to explore cross-listings between the exchanges was signed in 2023, though none have been executed so far.
While there could be more ETFs listed across both regions this year following government-backed policies, “more resources and education will be needed to get investors excited to invest into them,” said Bloomberg Intelligence’s Sin. BLOOMBERG
