By Wang Nina
The 2nd "Hong Kong - Saudi Capital Market Forum" attracted over 500 financial leaders from Saudi Arabia, mainland China, and Hong Kong, far exceeding the scale of the inaugural event last year. At the forum, the Premia Bank of China (Hong Kong) Saudi Islamic Treasury Bond ETF, which tracks Saudi government bonds, was officially listed in Hong Kong, opening up a new channel for Asian investors to participate in the Saudi market.
The Trump administration has also been actively engaging in "economic diplomacy" in the Middle East. Trump's visit to Saudi Arabia, Qatar, and the United Arab Emirates in May was said to have resulted in "agreements worth over two trillion US dollars," although many of these were long-term, non-binding memoranda of understanding. However, the "Vision 2030" of Saudi Arabia and other countries is by no means just a paper plan. This strategic plan, promoted by Crown Prince Mohammed bin Salman, is built around three pillars - a vibrant society, a thriving economy, and an ambitious nation - and has set 96 specific goals. To achieve a series of core indicators, Saudi Arabia urgently needs to leverage the economic levers of international strategic relations. With its tradition of the rule of law, financial innovation, and professional service advantages, Hong Kong can become an irreplaceable strategic partner in the economic diversification process of Middle Eastern countries.
As a neutral and professional international financial center, Hong Kong has no geopolitical baggage and can provide diversified investment channels and renminbi internationalization services that sovereign funds urgently need. In the Middle East's economic transformation, Hong Kong, with its unique advantages, is expected to play three key roles. First, as a financial connector. Currently, two ETFs tracking Hong Kong stocks have been listed in Saudi Arabia, with active trading and considerable asset management scale. As the world's largest offshore renminbi center, the improvement of Hong Kong's renminbi clearing infrastructure will provide Middle Eastern enterprises with a "safe option" beyond the US dollar.
In fact, Hong Kong's capital market has become the core channel for Middle Eastern sovereign wealth funds to allocate Asian assets. In May this year, the world's largest IPO, Contemporary Amperex Technology Co. Limited (CATL), was listed in Hong Kong, with the Kuwait Investment Authority investing 500 million US dollars as a cornerstone investor, and Alat, a subsidiary of the Saudi Public Investment Fund (PIF), subscribing to a 2 billion US dollars convertible bond of Lenovo Group.
Over the past few years, Hong Kong has achieved remarkable results in promoting technological cooperation between China and the Middle East. Some cross-border investment institutions have been deeply involved in the Middle East market for many years. For example, EDB Capital has successfully helped more than 20 technology companies, including Alibaba Cloud, J&T Express, and Liansheng Zhida, to enter the Middle East market using Hong Kong as a springboard.
Hong Kong's role as an economic and trade bridge is becoming increasingly strengthened. In May this year, Chief Executive John Lee led a trade delegation to visit Qatar and Kuwait, and for the first time, the delegation included mainland enterprises, showcasing a new model of "mainland + Hong Kong" collaborative going-global. Lawrence Lu, president of the Federation of Hong Kong Industries, signed a memorandum of understanding with local chambers of commerce on behalf of the chamber, opening up policy channels for Hong Kong enterprises.
Facing competitors such as Singapore and Dubai, Hong Kong has unique advantages in its Middle East strategy. The rule of law and professional service ecosystem form a core barrier, and its cross-border collaboration and innovation capabilities are also prominent. The Saudi Islamic Treasury Bond ETF creatively integrates Islamic financial characteristics with the traditional ETF structure. The Hong Kong Stock Exchange is also studying the launch of more structured products linked to the Saudi market to facilitate two-way capital flows. Unlike simply serving as a capital conduit, Hong Kong excels at integrating the industrial chain resources of the Greater Bay Area. Hong Kong is now promoting a new model of industrialization through collaboration among government, industry, academia, research, and investment, which can provide Middle Eastern enterprises with full-cycle support from research and development to mass production.
Meanwhile, Hong Kong faces many obstacles in expanding its Middle East market. In recent years, in line with the national and Hong Kong SAR government's policy of actively exploring the Middle East market, more and more Hong Kong financial technology companies have chosen to set up business in the Middle East. Many businessmen who have been exploring the Middle East market have deeply felt that the Middle East culture places great emphasis on "relationships." Also, it is necessary to have an in-depth understanding of local culture, customs, and religious taboos, and to adjust product design to adapt to the local market. In addition to conducting onshore business in the United Arab Emirates, one needs to obtain licenses from multiple departments, such as the central bank and the Virtual Asset Regulatory Authority, which go far beyond the scope of licenses in free trade zones. This requires Hong Kong enterprises to be well prepared for in-depth compliance.
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