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China and Saudi Arabia in talks to cross-list stock markets: Report

Talks to ease the path for stock purchases for Saudi and Chinese investors comes as economic ties between countries expand
Saudi Crown Prince Mohammed bin Salman welcomes Chinese President Xi Jinping in Riyadh, Saudi Arabia, on 8 December 2022 (Saudi Press Agency/Handout via Reuters)

Saudi Arabia and China’s top stock-market operators are in talks to offer a cross-listing of their respective Exchange Traded Funds (ETFs), allowing investors in Saudi Arabia and China to trade stocks or bonds on their countries' stock exchanges.

The talks between The Shenzhen Stock Exchange and Saudi stock exchange operator, Tadawul Group, are still in their early stages, according to Reuters, but could mark a major financial linkage for the two countries.

In the last several months, some of China's biggest ETF operators have already been informed about the possibility of a cross-listing agreement with Saudi Arabia, Reuters, which first reported the story on Friday, said.

China has made geopolitical inroads with Saudi Arabia, at a time when the kingdom’s relationship to Washington has come under strain over energy policy and human rights issues.

In December, Chinese President Xi Jinping received a red carpet-welcome in Saudi Arabia. China imports more than a quarter of the kingdom's total crude exports and has sold 5G and Huwaei technology to Riyadh, irking Washington.

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China’s biggest diplomatic coup came in March when it brokered a deal between Iran and Saudi Arabia to restore diplomatic relations. CIA director Bill Burns reportedly later complained to the Saudis that the agreement had "blindsided" the US.

Saudi Arabia and China’s growing political ties have coincided with a boom in economic activity.

'Beyond your imagination'

Saudi Arabia is already a central pillar of China's Belt and Road infrastructure initiative and ranks in the top three countries globally for Chinese construction projects, according to the China Global Investment Tracker, run by the American Enterprise Institute.

In June, Saudi Arabia announced billions of dollars in investment deals between China and the Arab world at a high-profile business conference in Riyadh. The announcement included a $5.6bn memorandum of understanding between the Saudi investment ministry and Human Horizons, a Chinese maker of electric and self-driving cars.

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MEE previously reported that Chinese businesspeople in Saudi Arabia were feeling optimistic that their two countries' burgeoning political ties would help drive business deals and that they felt more welcome operating in the oil-rich kingdom than in the western world.

Charles Li, the regional manager at Jiangling Motors in Saudi Arabia, told MEE last year that Chinese commercial vehicles were being sold in the kingdom at a pace “beyond your imagination”.

If Beijing and Riyadh reach an agreement to cross-list ETFs on each other's stock markets, it will be closely watched by analysts and diplomats. Separately, Saudi Arabia has reportedly been considering pricing some of its oil sales in yuan rather than dollars.

A move to conduct oil transactions with China in yuan would mark a profound shift for the oil market, where 80 percent of sales are conducted in dollars. All of Saudi Arabia's sales are exclusively done in dollars. Any change to that system could dent the greenback's status as the world’s reserve currency.

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