Shenzhen and Dubai pledge to increase cross-border ETF investment

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The Shenzhen Stock Exchange and the Dubai Financial Market have signed a memorandum of understanding to promote cross-border investment in China and the United Arab Emirates, including in the field of exchange-traded funds.

The cities’ exchanges will also collaborate on dual listings, shared index listings and fixed income offerings and help investors access both nations’ secondary markets, according to their announcement.

The exchanges will jointly host roadshows and seminars and conduct research and training to strengthen their respective capital markets and enhance trading opportunities for listed companies. They will also work jointly on market and product development and regulation, as well as environmental, social and governance practices.

Hamed Ali, chief executive of DFM and Nasdaq Dubai, said the MoU was “an essential step in strengthening our cross-border ties, promoting global investment opportunities and improving market accessibility”.

This article was previously published by Ignites Asia, a title owned by FT Group.

The latest memorandum of understanding between Shenzhen and Dubai comes as Chinese investors have sought to bypass sluggish mainland stocks and take advantage of Beijing’s closer ties to the Middle East.

Saudi Arabia’s first two mainland ETFs launched this year, but hit their upper bounds in price gains in the week of their debut in July, prompting a trading halt on the Shanghai stock exchange.

Fund managers say two factors underpin the strong interest in these funds: their ability to deliver better returns compared to mainland equity strategies and their exposure to the Saudi Arabian market, which China has attracted for stronger financial ties. tight

China’s first two Saudi Arabia ETFs have seen strong initial demand, collectively raising more than Rmb1.2 billion ($167.5 million) before officially listing.

China Southern Fund Management CSOP Saudi Arabia ETF QDII Fund raised about 634 million lei from 14,253 investors in its initial fundraising period from June 24 to July 2, according to the fund’s listing documents published on July 5 .

Meanwhile, Huatai-PineBridge CSOP Saudi Arabia ETF QDII Fund secured about 590 million lei from 7,665 subscribers during the same period, according to the fund’s listing documents.

Hong Kong regulators also urged asset managers to take advantage of emerging opportunities in the Middle East and China’s onshore market following policy moves that boosted ties with Gulf countries.

Funds hub Hong Kong has historically been a gateway to Chinese capital, but the Securities and Futures Commission last month called on the local funds industry to do more to capture growth opportunities in Middle Eastern markets.

Hong Kong officials last month reached an agreement with Abu Dhabi to cooperate in promoting investment from local players in each other’s jurisdictions.

This MoU focuses on promoting a “closer relationship” between Hong Kong and Abu Dhabi by facilitating inbound and outbound investment in both markets and the exchange of information on business environments and investment opportunities.

It also requires both government agencies to commit to helping local firms interested in setting up shop in each other’s jurisdiction.

*Ignites Asia is a news service published by FT Specialist for professionals working in the asset management industry. Trials and subscriptions are available at ignitesasia.com.