As China seeks to strengthen economic ties with the Gulf, investors from the world’s second biggest economy are getting an opportunity to place their bets on Saudi stocks while paying with their own currency.
Two exchange-traded funds focused on Saudi Arabia, the largest Arab economy, debuted today in the corporate centers of Shanghai and Shenzhen that will enable investors to put Chinese yuan directly into Saudi businesses and access information in Chinese, Bloomberg reports.
China emerged last year as Saudi Arabia’s most active foreign investor, pouring $16.8 billion into the kingdom and accounting for 58% of new business investments – primarily focused on automotive, metals and semiconductor investments. That was more than 11 times the $1.5 billion that China invested in Saudi Arabia in 2023, according to Dubai-based Emirates NBD.
At the Shenzhen stock exchange today, the China Southern Asset Management CSOP Saudi Arabia ETF QDII started trading after raising 634 million yuan ($87 million), Bloomberg reported. A second fund, the Huatai-PineBridge CSOP Saudi Arabia ETF QDII, began trading in Shanghai after raising 590 million yuan.
China Southern’s ETF targets investors “who have knowledge in equity markets, have demand for global asset allocation and have confidence in the energy sector,” said Mao Wei, the asset manager’s chief equity investment officer, according to Bloomberg. “People will pay more attention to Saudi Arabia looking at the energy and financial sector” compared with U.S. or Japan investment options, Wei said.