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

Klemens Katterbauer; Hassan Syed; Rahmi Deniz Özbay; Sema Yılmaz; Laurent Cleenewerck de Kiev

Authors

Klemens Katterbauer Centre for Islamic Metafinance, Euclid University, Bangui, Central African Republic / Africa https://orcid.org/0000-0001-5513-4418
Hassan Syed Centre for Islamic Metafinance, Euclid University, Bangui, Central African Republic / Africa https://orcid.org/0000-0003-2114-2473
Rahmi Deniz Özbay İstanbul Ticaret University, İstanbul / Turkiye https://orcid.org/0000-0002-3927-8216
Sema Yılmaz Yıldız Technical University, İstanbul / Turkiye https://orcid.org/0000-0002-3138-1622
Laurent Cleenewerck de Kiev Centre for Islamic Metafinance, Euclid University, Bangui, Central African Republic / Africa https://orcid.org/0000-0002-9267-0428

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.

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