Hong Kong is taking another big step to strengthen financial-market linkages with the Middle East with the launch of Asia’s first exchange-traded fund (ETF) tracking Saudi Arabia’s Islamic government bonds, or sukuk.
The ETF, called Premia BOCHK Saudi Arabia Government Sukuk ETF, started trading on the Hong Kong stock exchange on Thursday, giving local investors access to the world’s second-largest market for Shariah-compliant debt securities. The ETF trades in Hong Kong dollars under code 3478 and in US dollars under code 9478.
The fund tracks the performance of the iBoxx Tadawul Government and Agencies Sukuk Index, and includes only investment-grade sukuk issued by the Saudi government or its agencies and denominated in Saudi riyals or US dollars, according to a statement.
The ETF jumped 1.4 per cent to HK$82.20 and 1 per cent to US$10.44 as of 10.37am local time.
The ETF was launched by Premia Partners, a home-grown ETF provider, and BOCHK Asset Management, a unit of China’s third-biggest lender Bank of China. HSBC will provide cross-border fund services in both financial markets, the statement showed.
“There is a huge market in Islamic finance, and there are a lot of discussions that can be held between the market participants and our Islamic community,” Financial Secretary Paul Chan Mo-po said at the Capital Market Forum on Thursday. “The idea is to have a range of hot offerings that comply with their beliefs and their regulatory requirements, and the sky is the limit.”
