Cooperation in green finance, exchange-traded funds (ETFs), and Islamic finance are among the potential enormous growth areas for Hong Kong and the Gulf countries amid greater cross-border exchanges, a key business forum heard.

In his keynote speech at the "Gulf Cooperation Council Chapter" panel’s debut at the Asian Financial Forum (AFF), Secretary for Financial Services and the Treasury of the Hong Kong Special Administrative Region Christopher Hui Ching-yu offered ideas on how the city can work with Middle Eastern countries.

Speaking on Jan 14 in Hong Kong, Hui identified securities markets, Islamic finance, asset and wealth management, family offices, and green finance as areas of interest.

READ MORE: HK to boost ties with Gulf Cooperation Council members

"As a leading international financial center, we are very pleased to see the notable results achieved in recent years in strengthening our connection in Middle Eastern markets and creating more opportunities for its financial collaboration," said Hui.

He cited the Hong Kong Exchanges and Clearings Limited's memorandum of understanding with the Saudi Tadawul Group in February 2023, which saw the Saudi Exchange added as a Recognized Stock Exchange in Hong Kong that September. This allowed companies listed on its main board to apply for secondary listing in Hong Kong.

Hui also said the Asia Pacific region's first-ever ETF tracking Saudi Arabia's market has enabled international investors to share development opportunities in the Middle East through the Hong Kong market. Since its launch in November 2023, the ETF has registered about HK$3 million trading per day.

He said that the two ETFs tracking Hong Kong stock indexes listed in Saudi Arabia last October "completed the conduit for the two-way capital flow between the two places".

Hui said Islamic finance would help diversify the city's investor base and Hong Kong had taken concrete steps to build a conducive environment and legal platform for sukuk issuance and product development in partnership with key Islamic financial markets.

He cited amending tax laws in Hong Kong to provide a level-playing field between conventional bonds and sukuk, an Islamic financial certificate similar to a bond in Western finance that complies with Islamic religious, or sharia, law.

Hui also invited Middle Eastern countries to participate in opening up family offices in the city. He said Hong Kong offered the perfect environment for establishing family offices by introducing measures and education on wealth legacy and second-generation family offices, as well as tax benefits.

In his welcome keynote remarks, Gulf Cooperation Council Secretary-General Jasem Mohamed AlBudaiwi seized the opportunity to highlight opportunities for cooperation between the GCC and Hong Kong, which he described as "bound by historical relations and shared economic values".

AlBudaiwi said the GCC held a significant economic position globally with a GDP of $2.1 trillion in 2023 and it is expected to reach 6 trillion by 2050.

Additionally, he said the GCC's sovereign wealth assets stand at $3.2 trillion, accounting for 33 percent of the total sovereign assets worldwide.

He also said that the policies of the GCC countries have contributed to stabilizing global energy markets by ensuring secure and stable supplies of oil and natural gas.

“These substantial economic assets opened the door for cooperation opportunities with Hong Kong which stands as a leading financial hub in Asia,” said AlBudaiwi.

“The cooperation between the GCC countries and Hong Kong reflects a shared vision to promote innovation and sustainability in financial and economic activities around the development of trade, fintech, education, and other vital sectors that form that foundation of a future knowledge-based economy,” he added.

AlBudaiwi said among the current Gulf projects currently being implemented, they are “extremely proud” of the 2,100-kilometer-long railway project linking GCC countries, which is expected to be completed in 2030.

“This project will provide promising opportunities for the businesses and finance sectors to develop and invest in this large-scale project, particularly in localizing industries related to its construction operation and maintenance,” said AlBudaiwi.

“Additionally, the GCC power grid initially established as a sustainability project for energy between the GCC countries has become a commercial economic project for the electricity trade across the East-west connection,” he said.

He added that there are plans to expand electricity trade and connectivity with several regional and international intermediaries.

AlBudaiwi called the AFF an "important conference that brings together decision-makers from around the world in one of the most prominent global economic events" and expressed interest in holding a permanent session for the GCC for them to visit on an annual basis.

During the panel with GCC representatives, Assistant Deputy of Policies and Legislations Development at the Saudi Ministry of Investment Faris Algarni said his country is reforming investment laws that would be introduced next month and promised more financial liberty.

He also told the audience to look out for potential mega events following the region’s hosting of Expo 2020 Dubai, the FIFA 2022 World Cup in Qatar, and Saudi Arabia set to host the 2034 tournament, among others.

Undersecretary of the United Arab Emirates Ministry of Finance Younis Haji Alkhoori said Hong Kong and the UAE can explore diversifying energy sources and expressed hope to see a Hong Kong-GCC Free Trade Agreement.

He also identified areas such as insurance, healthcare, and biotech for the aging population.

Invest Oman CEO Nasser Khalifa Alkindi said his country was reforming a lot of laws to support more investors within Oman and the GCC and one factor of this was how these areas can benefit not only them but Hong Kong and the rest of the world.

“One thing we've been working a lot on is to enhance our regulation and standards to global standards,” he said, adding they were ready to collaborate.

Qatar Development Bank CEO Abdulrahman Al-Sowaidi said they “see a lot of overlaps in focus” with Hong Kong’s fiscal balances and budgets, especially in green finance, green aviation, and green tech.

He also invited those interested to look at Qatar’s free economic zones, which could be “organic expansions” for Hong Kong companies looking to tap into the country.

READ MORE: Gulf countries pivoting toward eastern Asia seen as logical

CSOP Asset Management Limited CEO Ding Chen said ETFs could be a pivotal engine between the GCC and Hong Kong as promoting the Hong Kong ETF sector can bring global capital into the local markets.

“Gradually by promoting local markets, they can set up their own capital markets to international standards,” she said.

HSBC’s Co-Chief Executive for Asia and the Middle East Surendra Rosha said Hong Kong could leverage areas of innovation and digital assets to work with the GCC countries.

Contact the writer at jan@chinadailyapac.com