Chinese Firms Launch Saudi-Focused ETFs, Enjoy Remarkable Trading Debut
Chinese Firms Launch Saudi-Focused ETFs, Enjoy Remarkable Trading Debut
On July 16, 2024, two ETFs focused on the Saudi market were launched by Chinese firms, marking the first of their kind in mainland China. These ETFs, namely Huatai-PineBridge’s Nanhua Saudi Arabia ETF (N Saudi ETF, 520830.SH) and Southern Fund’s Nanhua Saudi Arabia ETF (Saudi ETF, 159329.SZ), are listed on the Shanghai and Shenzhen Stock Exchanges. They primarily invest in the Nanhua Saudi Arabia ETF listed on the Hong Kong Stock Exchange.
The initial fundraising for these ETFs amounted to 634 million yuan and 590 million yuan, respectively. On their debut, their scale more than tripled, with premiums exceeding 6%. Additionally, the Saudi Public Investment Fund plans to open an office in Beijing by the fourth quarter or early next year.
On the first trading day, these ETFs opened nearly 2% higher and surged within half an hour, reaching their daily limit by the afternoon. The total trading volumes for the N Saudi ETF and Saudi ETF were 2.058 billion yuan and 2.838 billion yuan, respectively, with turnover rates of 333.72% and 427.67%. The high turnover rates were partly due to the support for intraday T+0 trading by cross-border ETFs.
Key Takeaways
- The scale of the Saudi-focused ETFs tripled on the first day, with premiums over 6%.
- The Saudi Public Investment Fund plans to open a Beijing office by late this year or early next year.
- Huatai-PineBridge’s and Southern Fund’s Saudi ETFs hit the daily trading limit on their debut on the Shanghai and Shenzhen Stock Exchanges.
- The total trading volumes for the two ETFs were 2.058 billion yuan and 2.838 billion yuan, with turnover rates of 333.72% and 427.67%.
- Cross-border ETFs supporting intraday T+0 trading led to high turnover rates.
Analysis
The launch of Chinese ETFs targeting the Saudi market reflects a strengthening financial partnership between the two countries, aligning with strategic economic interests and market expansion ambitions. The immediate surge in ETF values and high turnover rates indicate significant investor interest, likely driven by speculative trading and T+0 transactions. Over time, these ETFs could stabilize, influencing both Chinese and Saudi financial markets and bilateral relations. The planned opening of the Saudi Public Investment Fund’s office in Beijing further underscores the growing economic ties, impacting investment flows and diplomatic dynamics.
Did You Know?
- Cross-Listed ETF:
- Explanation: Cross-listed ETFs are exchange-traded funds listed on different exchanges, allowing investors to purchase the same fund in different markets. This mechanism typically facilitates cross-border investment and capital flow. The ETFs mentioned in the news, Huatai-PineBridge’s Nanhua Saudi Arabia ETF and Southern Fund’s Nanhua Saudi Arabia ETF, are cross-listed on mainland China and the Hong Kong Stock Exchange.
- Day Trading or Intraday Trading (T+0 Trading):
- Explanation: T+0 trading refers to the practice of buying and selling the same security within the same trading day without holding it overnight. This trading method increases market liquidity by allowing investors to trade the same security multiple times a day. The high turnover rates of 333.72% and 427.67% for the two ETFs are partly due to their support for intraday T+0 trading.
- Public Investment Fund (PIF):
- Explanation: The Public Investment Fund is Saudi Arabia's sovereign wealth fund, responsible for managing the country's investments and wealth. Its goal is to diversify and sustainably develop the Saudi economy through investments in domestic and international projects and companies. The plan to open an office in Beijing indicates the fund's expanding international presence and influence.