China and Saudi Arabia in talks to merge their respective ETF exchanges
Stock exchanges in China and Saudi Arabia are in talks to allow exchange-traded funds (ETFs) to list on each other's exchanges, three sources familiar with the matter said, as countries seek to deepen financial ties in a context of warming diplomatic relations.
The talks are still in an early stage and could mark an important first step by Beijing and Riyadh towards expanding cooperation beyond the energy, security and sensitive technologies sectors.
The Shenzhen Stock Exchange, one of mainland China's two major exchanges, is in talks with Saudi stock operator Tadawul Group over ETF Connect, as the program is called, two of the sources said.
For China, an “ETF Connect” deal with Saudi Arabia will be the first of its kind outside East Asia and will affirm a commitment to open up its financial markets, worth trillions of dollars, to international investors.
In recent months, some of China's largest ETF players have been informed of the possibility of a cross-listing deal with Saudi Arabia and some are considering the option, one of the sources said.
The China Securities Regulatory Commission, the Shenzhen Stock Exchange and the Tadawul Group did not respond to Reuters requests for comment. The sources declined to be named as they were not authorized to speak to the media.
Cross-listing ETFs will allow investors in China and Saudi Arabia to trade funds that track specific stocks or bond indices listed on their respective exchanges.
In recent years, China has launched "ETF Connect" projects with the offshore exchanges of Hong Kong, Japan, South Korea and Singapore.
According to insiders, the trading volumes of these programs have not yet taken off, although some products have proved popular.
At the end of June, a total of 886 ETFs worth $256.8 billion were listed on Hong Kong and China stock exchanges, according to Morningstar data.
Saudi Arabia's ETF market is relatively nascent, with only eight publicly traded products, although it is one of the largest emerging market stock markets with a capitalization of $2.7 trillion.
Hong Kong Exchanges and Clearing Ltd (HKEX) (0388.HK) is also in separate talks with its Saudi counterpart for a similar programme. HKEX signed an agreement with Tadawul Group in February this year to explore cooperation in a number of areas, including cross-quoting, to the mutual benefit of both organizations' financial markets, the Hong Kong Stock Exchange said. on that occasion.
Beijing, frustrated with what it sees as Washington's political use of the economy and finance, has sought to expand ties with countries in Europe, the Middle East and Africa. His diplomatic push to woo others includes US ally Saudi Arabia.
While economic cooperation between Beijing and Riyadh remains anchored in energy interests, ties on trade, investment and security have widened. China is Saudi Arabia's largest trading partner, with trade worth $87.3 billion in 2021.
This is another move by Beijing to avoid the economic and financial restrictions posed by Washington, and turning to the Arab market, very rich in financial resources deriving from oil, could prove to be a successful move.
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The article China and Saudi Arabia talk about merging their respective ETF exchanges comes from Scenarios Economics .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/cina-e-arabia-saudita-trattano-per-unire-le-borse-dei-rispettivi-etf/ on Thu, 10 Aug 2023 16:30:35 +0000.