In a significant shift in investment strategy, Hong Kong fund managers are increasingly focusing on attracting investors from the Middle East and Southeast Asia, capitalizing on a recent rally in the Hong Kong stock market. The Hang Seng Index has surged over 20% since September 18, 2024, reflecting improved market sentiment and heightened trading activity. On October 10, 2024, the market recorded a turnover of HK$620 billion (approximately US$80 billion), marking a notable increase in investor engagement [b816244d].
In a notable development, the Albilad CSOP MSCI Hong Kong China Equity ETF raised HK$10 billion (US$1.3 billion) by October 23, 2024, becoming the first ETF tracking Hong Kong stocks to be launched in Saudi Arabia. This fund, set to list on the Saudi Stock Exchange (Tadawul) on October 30, 2024, allows investors to buy in for as little as 10 Saudi riyals (approximately US$2.66). The ETF includes 30 large Hong Kong companies compliant with Sharia law, with top holdings including Meituan, Techtronic, and Anta Sports [99d71b7c].
Sam Yu, a representative from the Hong Kong Investment Funds Association (HKIFA), emphasized Hong Kong's role as a 'superconnector' for international investors, particularly in light of the recent market performance. Retail fund sales in Hong Kong have also seen a remarkable increase, rising 23% year-on-year to US$45.8 billion in the first seven months of 2024, with net sales surging 238% to US$7.8 billion during the same period [b816244d].
The favorable conditions for investment are further bolstered by the relaxation of the Wealth Management Connect scheme in February 2024, which has allowed for increased investments from mainland Chinese investors. Since its implementation, approximately 123,000 investors have participated, contributing 88.4 billion yuan through this initiative [b816244d].
In conjunction with these developments, the upcoming ETF launch is part of Saudi Arabia's Vision 2030 initiative aimed at diversifying its economy and enhancing capital market linkages with Asia. A second Hong Kong ETF is also set to launch on Tadawul on October 31, 2024, further strengthening this financial collaboration [99d71b7c].
Overall, the combination of a robust market rally in Hong Kong and the strategic initiatives by Saudi Arabia to launch ETFs reflects a broader trend of increasing financial collaboration between the Middle East and Asia, providing investors with diverse opportunities in emerging markets [6ef6a06e].