Albilad CSOP MSCI Hong Kong China Equity ETF

As the first Saudi Arabian exchange traded fund (ETF) to track Hong Kong-listed equities, the Albilad CSOP MSCI Hong Kong China Equity ETF garnered initial subscriptions of SAR4.49 billion (US$1.2 billion) ahead of its 27^th October 2024 offering close.

With trading started from the 30^th October 2024 on the Saudi Stock Exchange (Tawadul), this fund reciprocates the November 2023 HK$10 billion (US$1.29 billion) Saudi ETF launched by CSOP Asset Management in Hong Kong – tracking Tawadul-listed shares.

Albilad Capital CEO Zaid AlMufarih said the firm’s sixth-listed ETF is Shariah complaint and invests in major Chinese companies by mirroring the CSOP MSCI HK China Connect Select ETF, aiming for a low deviation of no more than 3% per annum.

“This open-ended fund represents the Saudi market’s readiness to adapt to global financial trends and its strategic role as a gateway between Eastern and Western markets, aiming to connect investors to the world’s second-largest economy.

“Moreover, the Chinese market features low correlation with major global markets, offering a unique tool for investment diversification.”

Zaid added that Albilad Capital’s ETFs constitute 70% of the total ETFs in the Saudi market, with unitholders of Albilad Capital’s ETFs making up 60% of the total unit holders in the Saudi market.

Focused on long-term growth and capital appreciation, initial and subsequent investments in this fund is handled via one creation unit – equivalent to ETF 100,000 units or valued at least SAR1 million (US$26,667).

The fund invests in both Hong Kong and Saudi markets, with up to 5% allowed to be placed in Shariah compliant money market, money market transactions and money market funds. The same 5% limit applies to Shariah compliant swap contracts.

Further, Shariah compliant financing is allowed with the amount capped at 15% of the fund’s net asset value – provided this financing period does not exceed one year and the fund’s assets are not pledged as collateral.

Classified as high risk, the fund’s passive management risk includes trading price variations due to time zone difference and unsynchronised business days and public holidays between Hong Kong and Saudi Arabia. A further fluctuation is the currency exchange due to the underlying securities being priced in HK dollars while the fund offering is in Saudi riyals.

There will be no periodic distribution as the fund manager will automatically reinvest the dividends resulting from investment returns.

*Disclaimer:  The opinions and viewpoints expressed in the Fund Profile do not constitute as a recommendation for any funds highlighted. The information presented is not investment advice and should not be treated as such.