Saudi fund tracking Hong Kong, China stocks raises $1.3 billion

An exchange-traded fund launched by Albilad Financial, the investment arm of Bank Albilad, has raised HK$10 billion ($1.3 billion), Bloomberg reported, citing a spokesman for CSOP, a company specializing in managing exchange-traded funds.

The country’s fund, which will track Hong Kong and Chinese stocks, has received approval from Saudi Arabia’s Capital Market Authority for the offering, according to a statement from the authority on Sept. 17. The index fund is scheduled to start trading on the Saudi stock exchange on Oct. 30, CSOB said on its official WeChat account.

The fund will be the largest of its kind listed on the Saudi stock exchange based on the amount it has raised, followed by the Alinma Saudi Local Government Sukuk ETF, which has assets of $342 million, according to data compiled by Bloomberg.

The Saudi Fund intends to invest at least 95% of its assets in the MSCI HK China Connect Select ETF managed by CSOP, which tracks the MSCI HK China Connect Select Index.

Sharia compliant fund

The country’s exchange-traded fund is the sixth listing for the company, which says it will invest in the largest Chinese companies listed on the Hong Kong market and compliant with the country’s Sharia committee, according to a statement on its website.

Exchange-traded funds (ETFs) offer easier access for investors seeking exposure to the markets the funds track (overseas) in local currency. The launch of these funds in the kingdom comes against the backdrop of a rapprochement in relations between Beijing and Riyadh.

Last year, an exchange-traded fund tracking Saudi stocks was launched for the first time in Hong Kong after raising more than $1 billion. In July, two small funds with exposure to Saudi stocks were listed on the Shanghai and Shenzhen stock exchanges on the mainland.

The Saudi market is expected to receive another fund that tracks Hong Kong stocks, as the Capital Market Authority announced on Wednesday its approval to launch an index fund affiliated with Al-Awwal Investment Company (SAB Invest), the arm of the Saudi First Bank, under the name of Al-Awwal Investment Hang Seng Hong Kong Exchange Traded Fund.

The fund, which tracks Hong Kong-listed stocks, is expected to launch by the end of the year and is expected to raise about $500 million, Bloomberg reported in September, citing people familiar with the matter.