YICAI｜China to Launch Saudi ETFs Next Week

(Yicai) June 20 -- Chinese asset managers are poised to launch the nation's first Saudi Arabia exchange-traded funds, offering mainland investors exposure to the stock market of the world's 17th largest economy.

Huatai-PineBridge Investments, the joint venture of Huatai Securities and PineBridge Investments, and China Southern Asset Management seek to raise CNY1 billion (USD137.7 million) for each of their Saudi ETFs between June 24 and July 2, they said yesterday.

The first will be listed on the Shanghai Stock Exchange, while the second will trade on the Shenzhen Stock Exchange.

The Shenzhen and Shanghai bourses signed agreements with Saudi Tadawul Group last September and December, respectively, to promote capital market links, including the cross-listing of stocks and ETFs, so that Chinese mainland investors can benefit from Saudi Arabia's economic growth.

The two ETFs will indirectly invest in the Middle Eastern country's stock market through the CSOP Saudi Arabia ETF [HKG: 2830], which was listed on the Hong Kong Stock Exchange by CSOP Asset Management, a unit of China Southern Asset, on Nov. 29. It was the first Saudi Arabia-focused ETF in the Asia-Pacific region.

The CSOP Saudi Arabia ETF tracks the FTSE Saudi Arabia Index, which embraces 60 listed businesses, including Saudi National Bank and Al-Rajhi Bank, petrochemicals giant Saudi Aramco, electricity producer ACWA Power, and chemicals firm Saudi Basic Industries. These five heavyweights have notched up a 1.9 percent return since the ETF listed.

With the release of Saudi Vision 2030 government program in 2016, the country committed itself to diversify its economy away from relying solely on crude oil. The FTSE Saudi Arabia Index climbed 44 percent in the five years ended May 31, beating the overall performance of emerging markets, according to global index compiler FTSE.

https://www.yicaiglobal.com/news/chinese-mainlands-first-saudi-arabia-focused-etfs-to-be-issued-soon