Hong Kong, Saudi Arabia may approve more cross-border financial products
HONG KONG/SYDNEY: Hong Kong and Saudi Arabia are considering allowing more cross-border financial products, authorities said on Thursday, as the two markets seek to deepen financial ties amid rising trade uncertainties.
An exchange-traded fund tracking bonds issued by the Saudi government started trading in Hong Kong on Thursday, the first fixed-income fund listed in the territory to offer such exposure.
Apart from the fund, more products - such as a sharia-compliant Sukuk bond and a real estate investment trust - are "in the pipeline" for approval to trade between Hong Kong and Riyadh, said Julia Leung, CEO of Hong Kong's Securities and Futures Commission.
"We're very comfortable in the cross listing of whatever products," Leung told those attending the Capital Markets Forum organised by Saudi exchange operator Tadawul Group.
Hong Kong launched Asia's first ETF tracking Saudi equities in November 2024, as the two markets look to spur capital flows as diplomatic relations warm between Beijing and Riyadh.
In the last few years, Hong Kong has been seen wooing Saudi Aramco to list in the city, a deal that would allow investors in the Asian financial hub easier access to the Saudi state oil giant.
Apart from stocks, there are opportunities for bonds, derivatives and other financial products between Hong Kong and the Middle East, Hong Kong's Financial Secretary Paul Chan said at the forum, when asked about the progress of a potential listing of Saudi Aramco.
The expansion of cross-border products coincides with rising trade tensions after U.S. President Donald Trump unleashed sweeping tariff measures in April roiling global markets.
A U.S. trade court on Wednesday blocked the tariffs from going into effect, ruling that the president overstepped his authority by imposing across-the-board duties on imports from nations that sell more to the United States than they buy.
Asked how countries and companies should navigate the uncertainty of trade deals following the U.S. court block, Chan said the move would "at least bring President Trump to reason". - Reuters
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And in that half-year, she has had to steer the 27-country bloc through Ukraine's war with Russia – now into its fourth year; fending charges of sitting on its hands over the deepening horrors in Gaza; and perhaps most traumatic of all for the Europeans, an unprecedented rupture in the transatlantic alliance after Donald Trump occupied the White House. Current American leaders – from President Trump to his key lieutenants – have handled Europe with barely concealed antipathy and distaste at times, making clear that the relationship which has been undergirded by links in almost every way conceivable since the end of World War II is up for review. 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Reeling from the shock of long-time ally the US ripping up the trade playbook – Europe was hit by a 20 per cent 'reciprocal tariff' before Trump called for a pause, and 25 per cent tariffs on auto, steel and aluminium imports – some European leaders want a pivot towards China, and to find common cause in open global trade. Leaders from countries such as Spain and France have made recent trips to Beijing, as has Kallas' boss, European Commission chief Ursula von der Leyen. But Kallas flags 'two big worries with China' – its role in Russia's war in Ukraine, and what she calls 'coercive economic practices' – the dumping of cheap Chinese goods in Europe. She runs through other concerns: Chinese-flagged ships that damage subsea cables in the Baltic Sea and cyber attacks that she says were conducted by Chinese companies on the Czech Republic. 'So these are not good signs. China is saying that they want good, strong relations with us Europeans. And then we say, if we are your friends, why are you doing these things to friends, or why are you helping those who are not our friends, like Russia? 'But there are, of course, different views as well on how to proceed with China,' she adds. 'We have very divergent views. As long as we have divergent views, then we are weaker. 'So this needs some contemplation on our side, how we see our relationship developing.' She refuses to be drawn into whether the bloc has developed a more pro-China tilt in the last six months. Later in June, she and the EU's 27 foreign ministers are meeting to see how they can work on a common position on China. The last such meeting was in June 2023. 'I think a lot has changed in the meantime,' she says wryly. One big change has been how the US has positioned itself in the Ukraine-Russia conflict. Trump has appeared to side with Moscow against Europe's strategic interests, inducing fears that Washington may throw Ukraine – and Europe – under the bus in a bid to end the war. But on May 29, Trump signalled that he would set a two-week deadline for Russian President Vladimir Putin to demonstrate his seriousness about ending the war. Asked whether he believed Putin intended to do so, a frustrated-sounding Trump told reporters: 'I'll let you know in about two weeks. We're going to find out whether or not he's tapping us along or not. And if he is, we'll respond a little bit differently.' But the mercurial Trump has had a track record of walking back on what he's said, and when asked if she thinks he is serious this time, Kallas gives little away but for a tiny grimace. She says simply: 'It has been now over two months since Ukraine agreed to an unconditional ceasefire. If you want the killing to stop, then you should put the pressure on the one who's doing the killing.' 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