Hong Kong’s ETF Framework for Enabling Investment in Islamic Compliant Corporations – An Analysis of Its Impact on Middle Eastern Investments

Hong Kong’s ETF Framework for Enabling Investment in Islamic Compliant Corporations – An Analysis of Its Impact on Middle Eastern Investments


Abstract views: 124 / PDF downloads: 51

Authors

Keywords:

ETF, Hong Kong, Regulations, Islamic Finance, Middle East

Abstract

China has undergone a significant transformation and the growing engagement with the Middle East has been exemplified in the growing collaboration and engagement. Financial investments and the enhanced accessibility of both financial markets have represented a cornerstone for mutual engagement. With the growing engagement and focus on attracting mutual investments, there has been a strong impetus in establishing Hong Kong as a major trading center for ETF investments with potential to contribute to financial sustainability into Saudi Arabia and enable both investors in Hong Kong and mainland China to invest into Saudi Arabian equities. A crucial component of the Saudi Arabian financial system is its strong focus on Shariah compliance across the entire financial value chain and this represents a key characteristic for investment in Saudi Arabian equities. With the growing interest of Hong Kong providing ETF derived investment opportunities in Saudi Arabia, regulatory questions arise related to both the offering within Hong Kong as well as via the ETF China connect. While there are still restrictions in terms of the types of assets and conditions that are permitted to be traded via the ETF China connect, it would generally qualify Saudi Arabian ETFs that are listed in Hong Kong to be offered in the mainland Chinese market.

References

Abraham, A. (2007). The Regulation of Virtual Banks: A Study of the Hong Kong Perspective. Social Science Research Network.

Alawi, S. (2019). The effect of direct foreign investment on stock price volatility in the Saudi market. Asian Economic and Financial Review, 9(8), 875.

Albassam, B. A. (2015). Does Saudi Arabia’s economy benefit from foreign investments? Benchmarking: An International Journal, 22(7), 1214-1228.

Bajaher, M., Habbash, M., & Alborr, A. (2022). Board governance, ownership structure and foreign investment in the Saudi capital market. Journal of Financial Reporting and Accounting, 20(2), 261-278.

Chen, J., & Xu, L. (2023). Do exchange-traded fund activities destabilize the stock market? Evidence from the China securities index 300 stocks. Economic Modelling, 106450.

Chen, X., Liu, Y., & Zeng, T. (2017). Does the T+ 1 rule really reduce speculation? Evidence from Chinese Stock Index ETF. Accounting & Finance, 1287-1313.

Cheng, S., Massa, M., & Zhang, H. (2019). The unexpected activeness of passive investors: a worldwide analysis of ETFs. The Review of Asset Pricing Studies, 296-355.

CMA. (2023). Rules for Foreign Investment in Securities. Riyadh: Capital Market Authority.

Guo, B., Wang, Z., & Fan, S. (2022). Does the Listing of Options Improve Forecasting Power? Evidence from the Shanghai Stock Exchange. Emerging Markets Finance and Trade, 4300-4308.

Hong Kong Exchange. (2023). ETF Handbook - a practical guide to Exchange Traded Funds. Hong Kong: HKEX.

Hwang, H.-C. (2010). The Fund Management Industry in Hong Kong and Asia-Pacific. SSRN Electronic Journal.

Jares, T. E., & Lavin, A. M. (2004). Japan and Hong Kong exchange-traded funds (ETFs): Discounts, returns, and trading strategies. Journal of Financial Services Research, 57-69.

Marszk, A., Lechman, E., Kato, Y., Marszk, A., Lechman, E., & Kato, Y. (2019). Exchange-Traded Funds Market Development in Asia-Pacific Region. The Emergence of ETFs in Asia-Pacific, 83-142.

Securities and Futures Commission. (2023). Quarterly Report . Hong Kong: SFC.

Tao, T. (1999). The burgeoning securities investment fund industry in China: Its development and regulation. Colum. J. Asian L., 13, 203.

Yang, C., & Chi, J. (2023). Investor sentiment and volatility of exchange‐traded funds: Evidence from China. International Journal of Finance & Economics, 668-680.

Downloads

Published

2024-06-26

How to Cite

Katterbauer , K., Syed , H., Özbay , R. D., Yılmaz, S., & de Kiev, L. C. (2024). Hong Kong’s ETF Framework for Enabling Investment in Islamic Compliant Corporations – An Analysis of Its Impact on Middle Eastern Investments: Hong Kong’s ETF Framework for Enabling Investment in Islamic Compliant Corporations – An Analysis of Its Impact on Middle Eastern Investments. Journal of Recycling Economy & Sustainability Policy, 3(1), 59–65. Retrieved from https://respjournal.com/index.php/pub/article/view/32