Paul Chan’s visit boosts HK-Middle East financial collaboration and investments
Hong Kong Financial Secretary Paul Chan Mo-po’s visit to Saudi Arabia, accompanied by a delegation of 110 Hong Kong financial, business and entrepreneurial leaders, marks the latest advancement in strengthening financial services collaboration between Hong Kong and the Middle East.
Hong Kong Exchanges and Clearing, the operator of the Hong Kong Stock Exchange, announced on Wednesday that it plans to open an office in Riyadh next year. Along with its offices in Beijing, London, New York, Shanghai and Singapore, its overseas offices will facilitate new opportunities for investors and issuers around the world.
READ MORE: Chan: HK can promote innovation, resilience and growth in Global South
“This underscores our strategic commitment to promoting greater capital market connections between the Chinese mainland and the Middle East, enabling us to foster greater global coverage and facilitate access for Middle East clients to Asia’s most international, diverse, and liquid capital markets in Hong Kong,” HKEX Chief Executive Officer Bonnie Chan Yi-ting said in a statement.
Hang Seng Investment Management, the fund manager of Hong Kong’s largest exchange-traded fund, the Tracker Fund of Hong Kong (TraHK), announced it will collaborate with SAB Invest to list the SAB Invest Hang Seng Hong Kong ETF on Thursday. SAB Invest is a subsidiary of Saudi Awwal Bank in Saudi Arabia.
The new ETF fund will fully invest into the TraHK, which invests in the largest and most established listed companies in Hong Kong and offers diversified exposure to key sectors of the Chinese mainland and Hong Kong economy. As of September, the assets under management of the TraHK stood at HK$166 billion ($21.4 billion).
Hang Seng Investment said the new ETF represents a strengthening of the financial bridge between Hong Kong and the Middle East; while SAB Invest said it believes the TraHK can deliver cost-effective, transparent, and liquid investment options that satisfy the rising demand for global diversification.
As of the end of September, the market capitalization of the Saudi Stock Exchange totaled $2.69 trillion — the largest in the Gulf Cooperation Council region and accounting for 65 percent of the region’s total market capitalization.
On Tuesday, the finance chief addressed the eighth edition of the Future Investment Initiative held in Riyadh, the capital of Saudi Arabia. This session focused on how the Global South could promote economic innovation, build resilience, and maintain growth while addressing the complexities of the international environment and the challenges of climate change.
Hong Kong can provide much-needed support in infrastructure financing, green finance and green technology, as well as financial technology for use in cross-border payments and settlements for promoting economic innovation, resiliency and growth in Global South countries, Chan said.
“As an international financial center, Hong Kong is actively promoting the development of green finance and green technology. The city could provide capital support for infrastructure and green projects in the Global South and guide funding to new projects through innovative financial products, such as securitized loans,” Chan noted.
READ MORE: Saudi Arabia looks to more exchanges with HKSAR
The finance chief said that many Global South countries are considering how to manage risks related to their trade and reserve currencies, and one option is to use their own currencies more for settlements. “Hong Kong is collaborating with multiple central banks to launch Project mBridge, aiming for faster, more cost effective, and more secure cross-border payments and settlements.”
He added that digitalization and green transformation will be significant trends in the future development of the Global South, and investing in suitable projects in these areas will yield long-term returns.
“The development of fintech will help make financial services more accessible and inclusive, facilitating leapfrog development for developing countries. Hong Kong can contribute to the Global South in these areas,” Chan argued.
Witnessed by Chan and Minister of Investment of Saudi Arabia Khalid Al-Falih, Hong Kong Science and Technology Parks Corp and Beta Lab — a venture capital firm focused on deep technology in Saudi Arabia — signed a strategic cooperation agreement. Both parties agreed to share resources, recommend startups to each other, facilitate connections within their startup networks, and jointly engage in market promotions and events.
