Saudi Arabia will boost private sector investment in manufacturing: deputy minister

Hong Kong and Saudi Arabia are expanding cooperation with ETFs as economic ties strengthen

RIYADH: Hong Kong is in the process of setting up an exchange-traded fund with Saudi Arabia that will track the former’s local stock indexes, a senior official said.

During his speech at the Hong Kong Capital Market Forum, Michael Wong – deputy financial secretary of the administrative region – revealed plans to establish a trading base in Riyad.

The move is aimed at strengthening economic relations not only between Hong Kong and Saudi Arabia, but also with mainland China.

Wong said: “We are working with several financial institutions to list an ETF in the Middle East to track Hong Kong stock indexes. The Hong Kong government is also considering establishing an economic and trade office in Riyad.”

Michael Wong, Deputy Financial Secretary of Hong Kong.

The event follows the November 2023 launch of an ETF tracking the performance of the Saudi Arabian index in Hong Kong.

“Just a few weeks ago, the China Securities Regulatory Commission announced a series of measures to further expand mutual access, making it even easier for Saudi companies to access Chinese capital,” he added.

In his speech, Wong revealed that Cathay Pacific Airways will begin flights from Hong Kong to Riyadh by the end of 2024, reducing flight times to six hours.

“Cathay Pacific will resume direct passenger flights between Hong Kong and Riyadh within a few months. And I was told it would happen in the fourth quarter of this year,” the deputy secretary of finance noted.

He added: “The friendship and partnership between Hong Kong and Saudi Arabia will go very far and stand the test of time.”

Saudi Arabia’s relations with Hong Kong

Khalid Al-Hussan, CEO of Saudi Tadawul Group.

In his speech at the opening ceremony of the event, Khalid Al-Hussan, CEO of Saudi Tadawul Group, emphasized that hosting the Capital Market Forum in Hong Kong signifies deepening ties between the two nations.

Al-Hussan further explained that the two-day forum, which began on May 9, brought together over 1,000 investors, listed companies and financial pioneers. Their goal is to explore the key challenges and opportunities that are shaping today’s market landscape.

“This forum is not just a meeting place, but a key bridge for investors from Hong Kong and mainland China to directly engage with Saudi issuers. By connecting the two dynamic economies of Saudi Arabia and Hong Kong, we are strengthening financial ties and synergies between two of the most promising and rapidly growing markets,” Al-Hussan said.

He added: “The convergence of Hong Kong’s technological evolution and Saudi Arabia’s economic diversification has set the stage for a new era of knowledge sharing and collaboration that goes far beyond capital markets.”

The president of the Tadawul Group added that since the introduction of Vision 2030, the Saudi Arabian stock exchange has undergone significant transformations.

He further highlighted the Kingdom’s aspiration to create an open market that is fully integrated with the rest of the world.

“Before Vision 2030, the Saudi capital market was a closed market, focusing on local issuers and also serving local investors. Vision 2030 arrived on the scene with a broader scope of goals. Vision 2030 clearly sets out goals for the Saudi capital market. We want an open and attractive capital market, integrated with the rest of the world,” Al-Hussan said.

He further noted that the average daily trading volume on the Saudi Arabian stock exchange has doubled in the last two years.

“Average daily turnover this year has almost doubled compared to the average of the last two years, reaching approximately SR9.5 billion in the first quarter, roughly equivalent to approximately US$2.3 billion per day, representing significant liquidity,” Al added -Hussan.

Abdulaziz bin Hassan, board member of the Saudi Capital Market Authority, emphasized that the Kingdom is undergoing a significant transformation and its market is among the top 10 in the world in terms of market capitalization.

He also noted a surge in initial public offerings in the kingdom’s market, accompanied by rapid expansion in the asset management sector.

“We now average about 40 IPOs per year, compared to one or two per year in the past, which shows the attractiveness of the market,” Hassan said.

He added: “Our asset management has grown significantly from $100 billion to $130 billion. The number of asset management participants used to be 250,000, and now we are over a million. This increase occurred within five years.”

For her part, Bonnie Y Chan, CEO of Hong Kong Exchanges and Clearing Ltd, noted that Saudi Arabia’s economic diversification process is steadily progressing and the Kingdom’s capital market presents significant potential for investors.

She further highlighted the key role of capital markets in strengthening and expanding global connections.

“Both China and Saudi Arabia are undergoing fantastic economic transformations that are opening up very interesting opportunities. On the Saudi side, diversification is key. Instead of focusing on the oil industry, we are seeing fantastic development in the Kingdom,” Chan noted.

Bonnie Y Chan, CEO of Hong Kong Exchanges and Clearing Ltd.

The goal is to accumulate capital worth $3.2 trillion

During a panel discussion, Saleh Al-Khabti, Saudi Arabia’s deputy minister of investment transactions, revealed that the Kingdom has set a target of over $3 trillion in fixed capital expenditure.

We have an ambitious Vision 2030 plan. We are at the halfway point. We are very proud of what we have achieved so far. Our goal is to accumulate fixed assets of $3.2 trillion,” Al-Khabti said.

The deputy minister added that Saudi Arabia has all the elements necessary to satisfy investor appetite.

He further noted that inflation in Saudi Arabia remains healthy and the Kingdom’s banking sector continues to maintain a strong position thanks to strong demand for loans.

“We have seen growth in the non-oil sector exceeding the long-term average for over two years, with non-oil growth at 4.4%. “Last year, our gross fixed capital formation was approximately $300 billion, an increase of 70 percent in five years and equivalent to 28 percent of our GDP,” Al-Khabti said.

He added: “We have a healthy market and a strong economy. Unemployment has dropped from 12 percent to 7.7 percent and women’s labor force participation has reached a high of twenty, well above our 2030 targets. So invest in Saudi Arabia and you’re welcome.”

The deputy minister also welcomed China’s participation in various sectors, including automotive, mining, technology and tourism.

“We welcome China’s increased participation in the automotive sector, electric vehicle sector and its value chain. We also aim high in the field of tourism. Our goal was 100 million visitors by 2030. The bad news is that we achieved it last year. That’s why our colleagues in the tourism industry have been set a new, inflated target of 150 million visitors by 2030.” – added Al-Khabti.