RIYADH: Hong Kong Exchanges and Clearing Ltd. is expanding its presence in the Middle East with the opening of an office in Riyadh, highlighting the growing collaboration between Saudi Arabia and Hong Kong.
In an interview with Arab News at the Future Investment Initiative in Riyadh, HKEX CEO Bonnie Chan expressed her excitement about the new office, emphasizing its strategic importance in connecting Hong Kong’s global financial network with Saudi Arabia’s dynamic economic landscape.
“We’re extremely excited about the fact that we are opening an office here in Riyadh,” Chan said. “We are a global exchange, so it is in our DNA that we want to connect internationally. And when I say connect, what we would like to connect is really, capital with opportunities.”
Chan pointed out the potential she sees in the Saudi market after spending several days in Riyadh, noting that HKEX’s presence in the Kingdom will enable the exchange to seize these opportunities and build essential relationships.
“Having been in Riyadh for a few days, I can see a lot of opportunities around in this region,” she stated. “It makes sense for us to have a presence here so that we are in a better position to capture those and establish relationships. I think that is very important,” she said.
The decision to establish a foothold in Riyadh is part of a broader strategy that HKEX has been developing in recent years. According to Chan, the exchange began building connections with Saudi Arabia and the wider Gulf Cooperation Council region several years ago, culminating in key initiatives aimed at fostering mutual economic ties.
“We started actually developing the relationship with this region since a few years ago,” she said. “And we’ve done a few things, including signing an MoU with the Saudi Exchange. We have also been hosting events such as the FII Priority, last year in Hong Kong. Earlier this year, we also had the Capital Markets Forum.”
These interactions, Chan noted, were instrumental in the decision to open an office in Riyadh. “Through those events, I think we have already started developing relationships. And I think we have reached a point where we know that we need local presence, and that's why we are opening an office here,” she added.
Chan highlighted the goals outlined under Saudi Arabia’s Vision 2030, particularly the nation’s focus on economic diversification and green transition initiatives. “Over the last few days, I have met many people here. And I now have a better appreciation of what is really involved in this Vision 2030. There is a lot of need for diversification,” she observed. “And also, in a lot of the discussion in the last three days, there's a lot of talk about the whole green transitioning plan.”
The CEO believes HKEX is well-positioned to facilitate capital flows between Saudi Arabia and global markets, particularly China, which she described as a fertile ground for international investment. “Where we are, in Hong Kong, we’re very good at connecting,” she noted.
Chan emphasized that Hong Kong’s role as a “super connector” extends beyond facilitating foreign investments into China; it also aids Chinese investors in diversifying globally, with Saudi Arabia emerging as a prime destination.
“People on the mainland are very eager to diversify outside of opportunities domestically,” she explained. “And I think actually the Middle East, and Saudi Arabia could be a good destination. And therefore, from our perspective, what we would like to do is to help build that connection.”
Building familiarity among Hong Kong investors with Saudi companies has been central to this effort. Last year, HKEX introduced Asia’s first Saudi-focused exchange-traded fund, offering Hong Kong investors exposure to more than 50 prominent Saudi companies.
“I think this journey began last year, when we listed in Hong Kong the first Asia’s first ever and the world’s biggest Saudi underlying ETF in Hong Kong,” Chan explained.
“With this ETF, you basically provide the opportunity for investors in Hong Kong to get investment into basically these very exciting Saudi Arabian companies. Now, I think it is a very important step because you need investors to build up that familiarity,” she added.
This week, Chan noted, the Saudi exchange has reciprocated, with two Hong Kong-tracking ETFs listing on Tadawul, signaling a promising start to cross-border investment flows.
“This week we are seeing a reciprocation. Basically, two ETFs listed on the Tadawul, which tracks investment in Hong Kong-listed companies,” she said. “I’m very happy I learned from one of the people putting together the seesaw ETF yesterday that immediately that has become the most traded ETF on Tadawul yesterday as it opened for trading. And today there is another one which is the SAP Hang Seng Index.”
Looking to the future, Chan believes this growing familiarity and investor engagement will pave the way for deeper financial ties, potentially culminating in dual listings on HKEX and Tadawul.
“If you think about it, once this familiarity is built out, hopefully that’s going to create more interest,” she said. “Ultimately, from ETFs, we may even see companies actually seeking a listing in one another’s exchange,” Chan added.
The CEO elaborated on the collaborative areas outlined in HKEX’s MoU with Tadawul, including cross-listing, environmental, social, and governance initiatives, and financial technology.
“When we signed the MoU with Tadawul, we wanted to focus on three things. So first of all, it's cross-listing. The second one is ESG and related initiatives. And the third one is fintech,” she explained.
“So, since signing that MOU, we have continued our dialog. In fact, Tadawul was the first stop on this trip. You know, as soon as I landed in Saudi Arabia in Riyadh. I went and paid a visit to our friends at Tadawul,” she added.
HKEX has been steadily expanding its international footprint in recent years, beginning with its first office in Singapore, followed by New York and London. Riyadh is the latest addition, a step that Chan described as part of HKEX’s long-term strategy to solidify its role as a “super connector” in global finance.
Chan emphasized that the Riyadh office will play a crucial role in linking Saudi investors and corporates with opportunities in Asia. “My anticipation and plan once our Riyadh office has happened, is for the staff here to really reach out to both investors here as well as corporates here and see what they would like us to do to help them foster relationships with investors and corporates in our region in Asia,” she shared.
HKEX has demonstrated resilience as a financial exchange, recently achieving record trading volumes driven by heightened market activity. “For the first six months of this year, our average daily trading volume was about 106 billion HKD, which will be approximately $13 billion,” Chan stated. “However, we have a recent rally, and it happened around the end of September, early October. The rally was very good, very strong. So much so that we broke trading volume record three times in ten days.”
Looking ahead, Chan expects that HKEX’s expansion in Saudi Arabia will foster a two-way capital flow, benefiting both regions. “As we expand our operations here, as investors in this part of the world get more familiar with opportunities in our region, then we can serve that purpose of bringing the capital to really match the opportunities which are available,” she said.
