Chen Maobo: Hong Kong should deepen exchanges and cooperation with the Middle East, as it is in a favorable historical moment.

On August 24th, the Financial Secretary of Hong Kong, Paul Chan Mo-po, published a blog post titled "Starting with the Saudi Super Cup." Paul Chan Mo-po stated that Hong Kong is in a favorable historical moment for deepening exchanges and cooperation with the Middle East. China is actively promoting cooperation with countries in the "Global South" to achieve mutual development and Hong Kong can play a more comprehensive role as a "super connector" and "super value-added person" under the "one country, two systems" framework. In recent years, several Middle Eastern countries have outlined development visions aimed at diversifying their economies beyond the energy industry, accelerating infrastructure and industrial development, especially in the fields of finance and innovative technology. This presents new opportunities for Hong Kong's financial, technological innovation, and other professional services. At the same time, recent geopolitical developments have encouraged Middle Eastern investors to increase investments outside of the US and Europe to diversify risks. Hong Kong's internationalized market and efficient linkage with the mainland market, as well as its operational methods and regulatory environment seamlessly compatible with international standards, make it an ideal platform for diversifying asset allocation and wealth management for them. Paul Chan Mo-po stated that since the end of September last year, the Hong Kong stock market has performed strongly, attracting more interest from Middle Eastern investors. Recently, several new stocks listed in Hong Kong have attracted significant investments from the Middle East, with investment amounts exceeding one billion US dollars, reflecting Hong Kong's absorption of more diverse capital. According to data from the International Monetary Fund, the positions of Saudi Arabia, Kuwait, and Bahrain in Hong Kong's securities investment are expected to increase to 6.3 billion US dollars in 2023, with a compound annual growth rate of about 17% over five years. The exchange and cooperation between regulatory agencies and market participants in Hong Kong and the Middle East have continued to deepen. Last year, Paul Chan Mo-po held a roundtable meeting with the capital market regulators in Saudi Arabia during his visit, and this year there have been several visits to Hong Kong by Middle Eastern representatives. A key event was the "Hong Kong-Saudi Capital Market Forum" jointly organized by the Hong Kong Stock Exchange and the Saudi Stock Exchange Group in May this year. Also, in May of this year, the Securities and Futures Commission of Hong Kong signed a memorandum of understanding with the Financial Services Regulatory Authority of Abu Dhabi to enhance cooperation in regulatory information exchange. Middle Eastern countries are keen to accelerate local infrastructure development, introduce more innovative technology, and promote industrial development, which also brings a wealth of business opportunities to Hong Kong's startups, technological innovation enterprises, and professional service companies, especially providing a broader platform for research and commercialization of scientific achievements. Several local Hong Kong technological innovation companies that accompanied Paul Chan Mo-po on the visit to Saudi Arabia last year, especially those in green technology, smart cities, and renewable energy sectors, have demonstrated outstanding performance in exploring the Middle Eastern market. For example, a local startup providing intelligent sensing technology solutions successfully expanded its business in the local market after visiting Saudi Arabia last year, achieving a significant year-on-year increase in turnover and participating in the largest construction project in the region. The interactions between Hong Kong and the Middle East in recent years have deepened and expanded to various areas, not limited to finance and trade, but also encompassing cultural, artistic, and sports exchanges. In the past two years, in addition to sports events such as the Saudi Super Cup and LIV GOLF, there have been more mutual visits and exchanges between cultural and artistic professionals from both regions. For example, in March this year, we held a Hong Kong film screening event in Dubai, UAE, including a locally produced film with box office revenue exceeding a billion Hong Kong dollars, which received positive responses. These interactions help deepen mutual understanding and awareness of each other's culture, history, and customs, laying a solid foundation for deeper and more substantial cooperation between Hong Kong and the Middle East in other fields in the future. In fact, the exchange of personnel between Hong Kong and the Middle East has been increasing. The number of visitors from Gulf countries to Hong Kong increased by 70% last year, and increased by more than half in the first seven months of this year. The Hong Kong-Riyadh direct flight that resumed last October is frequently fully booked and there seems to be room for increasing flights. The total bilateral trade between Hong Kong and Gulf countries reached 150 billion Hong Kong dollars last year, with an average annual growth of about 11% over the past five years. Hong Kong is the seventh largest trading partner of the UAE. In addition to having economic and trade offices in Dubai, UAE, as well as advisory offices in Cairo, Egypt, and Izmir, Turkey, we are also working to establish an economic and trade office in Riyadh, Saudi Arabia, to further promote economic, trade, and cultural relations between Hong Kong and the Middle East and North Africa. Paul Chan Mo-po mentioned that the Hong Kong government has been intensifying efforts to deepen cooperation with the Middle East. In May this year, the Chief Executive of Hong Kong led a trade delegation to visit Qatar and Kuwait, resulting in the signing of 59 cooperation memoranda and declarations. Over the past few years, Paul Chan Mo-po has visited several countries in the Middle East and North Africa, including Saudi Arabia, Bahrain, and Morocco. He has attended the "Future Investment Initiative" (FII) conference in Saudi Arabia twice and successfully invited them to host the FII Asia Summit in Hong Kong in 2023, the first time that FII will hold a session in Asia. Last year, Paul Chan Mo-po led a delegation of over a hundred representatives from the financial and technological innovation sectors to visit Saudi Arabia, witnessing the signing of several cooperation projects and memoranda in the financial and technological innovation fields between the two regions. As of last week, two exchange-traded funds (ETFs) tracking the Saudi market have been listed on the Hong Kong Stock Exchange, while two ETFs tracking Hong Kong stocks have been listed on the Saudi Stock Exchange, marking a significant milestone in fund connectivity between the two regions. The combined market value of the two Hong Kong ETFs exceeds 16 billion Hong Kong dollars, with an increase of about 30% since listing. Aside from the Middle East, the linkage between Hong Kong and Central Asia is also strengthening. A natural resources company rooted in Kazakhstan will be listed in Hong Kong this week. This listing is the world's first project to be simultaneously listed on the Hong Kong Stock Exchange and the Astana International Exchange (AIX) in Kazakhstan, and it is also the first stock in the Central Asia region priced in RMB. This signifies not only financial market cooperation between Hong Kong and Central Asia, but also marks a new chapter in the internationalization of the RMB. Looking ahead to the second half of the year, the Hong Kong government team will continue to promote the advantages and business opportunities of Hong Kong and the mainland to the world, including delegations to consolidate and deepen multi-level and multi-field exchanges and cooperation with emerging markets, to open up more development opportunities for local enterprises and institutions.