China and Saudi Arabia to Permit Exchanges of ETFs on their Respective Exchanges

Three sources familiar with the matter said that China and Saudi Arabia's stock exchanges are in talks to allow exchange-traded funds (ETFs) to list on each other's bourses, as the countries seek to deepen financial ties amid warming diplomatic relations.

According to the sources, the talks are in their early stages and could be a significant first step for Beijing and Riyadh in broadening cooperation beyond energy, security, and sensitive technology sectors.

According to two sources, the Shenzhen Stock Exchange, one of the two major bourses on the Chinese mainland, is in talks with the Saudi Tadawul Group, which operates the Saudi Stock Exchange, about the ETF Connect programme.

An 'ETF Connect' partnership with Saudi Arabia will be the first outside of East Asia, confirming China's commitment to opening up its trillion-dollar financial markets to international investors.

According to one of the sources, some of China's largest ETF operators have been notified in recent months about the possibility of a cross-listing agreement with Saudi Arabia, and some are considering the option. The cross-listing of ETFs will allow investors in China and Saudi Arabia to trade funds that track specific stocks or bond indexes listed on the stock exchanges of the other country.