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Hong Kong Exchanges and Clearing’s (HKEX) new office in Saudi Arabia, which opens this year, reflects its determination to expand in the Gulf and will act as a bridge between financial markets in mainland China and the Middle East, the bourse operator’s managing director has said. Johnson Chui’s comments came amid reports that Dubai-based diaper maker Softcare had begun assessing investor interest in its Hong Kong initial public offering (IPO) after passing its listing hearing. Chui, HKEX’s managing director and head of global issuer services, said the office in the Saudi capital Riyadh was essential because the bourse needed staff based in the kingdom to cultivate ties with local firms. “It is an important strategic decision for us to enter this market, showing our determination in developing [business in] the area,” Chui told the Post in an interview on Wednesday. Chui, who was part of the delegation led by Financial Secretary Paul Chan Mo-po at this year’s Future Investment Initiative (FII) forum in Riyadh, said the office would provide information and assistance to interested companies while exploring opportunities for dual listings in Hong Kong and the Middle East. Following the launch earlier this year of Asia’s first exchange-traded fund (ETF) tracking Saudi Arabia’s Islamic government bonds – the Premia BOCHK Saudi Arabia Government Sukuk ETF – expectations have been running high for the first Middle East firm to list in the city. However, Chui said each firm has its own agenda and declined to comment on individual companies. “We do not have a specific [estimated] time frame for the first company from the Middle East to list in the city [Hong Kong], as every firm has its own pace,” he said. But he stressed that Hong Kong, as an international financial market, has its own advantage in luring investors and companies to list in the city, citing its top ranking as the world’s largest IPO market this year. About 300 companies are currently in the listing pipeline, promising another strong quarter for fundraising in the city, according to HKEX. HKEX’s CEO, Bonnie Chan Yiting, said earlier that international investors, including long-term funds from Europe and the Middle East, were involved in new listings this year. Chui said that HKEX and Hong Kong could benefit from escalating geopolitical tensions, given the city’s flexibility and ability to adapt to market needs. Speaking about the challenges of entering the Middle East, he said HKEX viewed it as a learning process in expanding into a new region and figuring out how to advance its progress there. He also reported fruitful results in meetings with numerous representatives from local banks and regulators. Also on Wednesday, the financial secretary told a breakfast meeting in Riyadh that he was very optimistic about business opportunities with Saudi Arabia amid what he described as “geoeconomic fragmentation”. Chan said Middle East businesses were increasingly interested in tapping into the mainland market and Hong Kong would serve as a natural gateway. “We can guide them and form partnerships to help them enter the mainland market,” he told representatives from Saudi Arabia’s financial sector. He also stressed the vital role of cross-border financial collaboration, saying Hong Kong would present a very attractive platform for Saudi investment in the future.
