Riyadh, capital of Saudi Arabia Photo: VCG

China's Shenzhen Stock Exchange (SZSE) and Saudi Tadawul Group, operator of the Saudi Stock Exchange, have inked a Memorandum of Understanding (MOU) for financial cooperation in various areas, including environmental, social, and corporate governance (ESG), fintech and a potential exchange-traded fund (ETF) connect, the SZSE announced on Monday.

The announcement marks a crucial step in the two countries' increasing efforts to bolster cooperation in a wide range of areas, including the financial sector, investment, green development and technologies. Senior Chinese officials met with Saudi Investment Minister Khalid Al-Falih over the weekend in Beijing to discuss bilateral cooperation.

The MOU between the SZSE and Saudi Tadawul was signed on Sunday in the Saudi capital of Riyadh, in which both sides stated that they would engage in various areas, including ESG, fintech and investors services, the SZSE said in a statement on Monday.

Most notably, both sides will also jointly study and promote cooperation in financial products such as indexes, funds and real estate investment trusts, or REITs. They will also study and explore an ETF connect and cross-listing of companies, according to the statement.

Moreover, a China-Saudi Arabia cross-border capital service mechanism will be established based on the SZSE's V-Next platform to promote the participation of market entities from both sides in cross-border investment and to further promote the integration of China-Saudi Arabia capital markets, the statement said.

This marks another crucial step in growing financial cooperation between China and Saudi Arabia. In September, the Shanghai Stock Exchange also signed an MOU with Saudi Tadawul Group to promote cooperation. Under the MOU, they will explore opportunities in cross-listing, Fintech, ESG, data exchange, and research, as well as promoting diversity and inclusion in both markets, according to the SSE.

Underscoring deepening financial cooperation, the People's Bank of China, China's central bank, and the Saudi Central Bank signed a local currency swap agreement in November, totaling 50 billion yuan ($6.98 billion) or 26 billion Saudi riyals, to expand the use of both currencies and promote trade and investment facilitation.

Growing financial ties come as the countries are deepening bilateral cooperation in a wide range of areas, including investment, trade, green development and technology.

During a meeting with Al-Falih in Beijing on Sunday, Chinese Commerce Minister Wang Wentao said that China stands ready to work with Saudi Arabia to continue to expand the scale of cooperation in trade, investment, energy resources, infrastructure, high-tech and other fields. For his part, the Saudi investment minister said that his country hopes to further expand the scale of bilateral trade and investment cooperation.

Also on Sunday, Mayor of Beijing Yin Yong met with Al-Falih, and the two sides agreed to deepen cooperation in areas such as technological innovation and smart city development, according to the Beijing Daily newspaper on Monday.

Al-Falih also met with Zhu Gongshan, chairman of Chinese solar firm GCL Technology Holdings, on Sunday, during which the Saudi investment minister expressed hope that GCL's new energy materials technology project will be launched in Saudi Arabia as soon as possible, news website thepaper.cn reported on Monday.

Bloomberg reported in September that GCL was in advanced talks with Saudi Arabia about opening its first overseas factory.

Global Times