Chinese investors are increasingly pouring money into two newly launched exchange-traded funds (ETFs) tracking Saudi stocks, driven by poor local equity performance and the allure of foreign assets. The Saudi-focused ETFs debuted on July 16 in Shanghai and Shenzhen, each surging by the daily 10% limit on their first two trading days. Trading was briefly halted on July 18 as share prices’ premiums over net asset values soared too high. This surge in interest is fueled by strengthening economic and trade ties between China and Saudi Arabia, highlighted by recent billion-dollar deals in technology, solar power, and electric vehicles.
Nelson Yan of Fosun Wealth International noted that Chinese investors are seeking better returns overseas due to low domestic yields, supported by government encouragement and index development focused on the Middle East. The two Saudi ETFs track the FTSE Saudi Arabia Index, with significant weightings in financials, basic materials, and energy companies like Al Rajhi Bank, Saudi Aramco, and Saudi National Bank.