Hong Kong Welcomes Saudi Arabian Investors in Bid to Boost Economy
Hong Kong embraces new business partners as it confronts economic challenges and geopolitical uncertainty
Hong Kong, in an effort to revitalize its slumping economy and mitigate the risks posed by US-China tensions, has extended a warm welcome to Saudi Arabian elites for an investment conference. The city’s Chief Executive, John Lee, hailed the event as a significant step forward in deepening ties between Hong Kong and the Middle East, particularly the Kingdom of Saudi Arabia. This move comes as Hong Kong seeks to diversify its economic partnerships and attract foreign investment amid a decline in property prices and a decrease in foreign companies using the city as a regional base.
Hong Kong’s Strategic Courtship of Saudi Arabia
Hong Kong has been actively courting Saudi Arabia as a potential business partner, recognizing the size of its economy and its trusted alliance with China. In 2020, the two countries signed a strategic partnership agreement, solidifying their commitment to collaboration. The investment conference organized by the Hong Kong government, its stock exchange, and the Future Investment Initiative (FII) Institute, a nonprofit founded by Saudi Arabia’s sovereign wealth fund, is seen as a significant opportunity for Hong Kong to strengthen its economic ties with the Middle East.
Diversification Amid Global Challenges
As Hong Kong faces a global economic slowdown and a drought of initial public offerings (IPOs), the city is actively seeking to diversify its economic partnerships. The IPO market in Hong Kong is currently experiencing its worst year since 2003, with only $4.6 billion raised as of early December. Hong Kong’s government is determined to reverse this trend and attract more IPOs. In February, Chief Executive John Lee proposed the idea of a listing in Hong Kong to the CEO of Saudi Aramco, the world’s third most valuable company. A potential listing of Aramco in Hong Kong could spark an IPO reawakening and position the city as a gateway for bridging Middle East titans and Asian ambitions.
Hong Kong Stock Exchange’s Role
The Hong Kong stock exchange has taken steps to facilitate a potential secondary listing of Saudi-listed companies. In September, it added the Saudi stock exchange to its list of recognized exchanges, allowing Saudi companies to apply for a secondary listing in Hong Kong. This move strengthens Hong Kong’s position as an attractive destination for Middle Eastern companies looking to diversify their investments. Additionally, Hong Kong recently introduced Asia’s first exchange-traded fund (ETF) to track Saudi Arabian equities, providing investors with a convenient way to invest in the Gulf country’s biggest listed companies.
Conclusion:
Hong Kong’s embrace of Saudi Arabian elites for an investment conference signifies its determination to bolster its economy and diversify its economic partnerships. By strengthening ties with Saudi Arabia, Hong Kong aims to mitigate the risks posed by US-China tensions and attract foreign investment. The potential listing of Saudi Aramco in Hong Kong could revitalize the city’s IPO market and position it as a crucial bridge between the Middle East and Asia. As Hong Kong navigates through economic challenges and geopolitical uncertainties, its strategic courtship of Saudi Arabia offers a promising avenue for growth and resilience.