Choosing Hong Kong as Saudi Tadawul Group (STG)’s first overseas Capital Markets Forum on Thursday shows the relationship between the financial hub and the Middle Eastern country has entered a new stage, officials said.
“Hong Kong and Saudi companies and investors will know each other better through the 300 point-to-point meetings organized by this forum” said Bonnie Chan Yiting, CEO of Hong Kong Exchanges and Clearing Ltd (HKEX). “It is expected that the first Saudi company will be listed in Hong Kong soon.”
After Asia’s first exchange-traded fund tracking shares to list in Saudi Arabia that debuted in Hong Kong last year, Hong Kong is now teaming up with Saudi Arabia to develop an ETF designed to track the Hong Kong stock index, said Deputy Financial Secretary Michael Wong Wai-lun
Such collaboration is expected to revive Hong Kong’s initial public offerings market. Although Hong Kong is still among the world’s leading financial centers, Hong Kong’s IPOs and stock trading proceeds in 2023 dropped to the lowest level in two decades and had a sluggish start to this year.
Only 15 companies have listed on HKEX so far this year, raising a total of HK$7.81 billion ($999.26 billion), according to Bloomberg. The biggest debut in 2024 — that of Chinese bubble-tea maker Sichuan Baicha Baidao Industrial — plunged 27 percent on its first day of trading.
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“About 100 applications for listing are in the queue, which shows an increase of 30 percent year-on-year.” Chan said on the sideline of the forum.
After Asia’s first exchange-traded fund tracking shares to list in Saudi Arabia that debuted in Hong Kong last year, Hong Kong is now teaming up with Saudi Arabia to develop an ETF designed to track the Hong Kong stock index, said Deputy Financial Secretary Michael Wong Wai-lun.
Collaboration with Middle Eastern countries will speed up Hong Kong’s development. “Hong Kong and Saudi Arabia can become the best partners and the collaboration has huge potential for cooperation.” Wong said.
Saudi Arabia has a clear goal to develop its financial market and realize its Vision 2030, which sets out long-term development priorities to move toward a diversified and sustainable economy, while Hong Kong is a highly open and international financial center with a regulatory system consistent with major overseas markets.
Wong said that Hong Kong can become a financing platform for Saudi Arabia and a springboard for Saudi companies to enter the Chinese market. The special administrative region can also provide Saudi Arabia with an opportunity to allocate offshore renminbi assets.
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Saudi Tadawul Group was established in March 2021, following the transformation of the Saudi Stock Exchange (Tadawul) into a holding group structure. Before its transformation, Tadawul was the ninth largest stock market among the 67 members of the World Federation of Exchanges.
