(Bloomberg) -- Two Saudi Arabian investment firms are set to launch exchange traded funds that will be the country’s first to track Hong Kong shares and are expected to raise close to $1 billion, offering the latest sign of growing ties between the oil rich kingdom and China.
One Saudi Arabian exchange-traded fund tracking shares listed in Hong Kong is expected to raise about $500 million, according to people familiar with the matter. That fund is set to be launched by the end of the year by SAB Invest, an arm of Saudi Awwal Bank, the people said, asking not to be named because terms are not public.
Deliberations are ongoing, and the ETF size and listing timing may change, the people added. SAB Invest declined to comment. HSBC Holdings Plc holds a stake in Saudi Awwal Bank.
A second ETF by by Albilad Capital, the securities arm of Bank Albilad, also tracking Hong Kong and China shares, received approval by the Saudi Capital Market Authority for an offering, according to a statement on Tuesday. The fund is expected to raise up to $400 million and list by the end of the year, the people said.
Albilad didn’t immediately respond to request for comment and Saudi Tadawul Group, which owns the Saudi Exchange, declined to comment.
The ETFs provide easier access in local currency to investors seeking exposure to the markets the funds track, and are being offered on the back of warmer relations between Beijing and Riyadh.
Last year, an ETF tracking Saudi stocks debuted in Hong Kong after raising more than $1 billion. In July, two smaller funds that are ultimately exposed to Saudi shares listed in the mainland bourses of Shanghai and Shenzhen.
--With assistance from Christine Burke.
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