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Global Impact: is the 'economic centre of gravity' moving towards Asia as Saudi ministers, executives descend on Hong Kong?

When Laura Cha Shih May-lung struck the ceremonial gong at the Hong Kong stock exchange (HKEX) with the Future Investment Initiative (FII) Institute's governor Yasir Al-Rumayyan, they kicked off the biggest gathering of Saudi government ministers and business executives ever assembled in the city.

More than 1,000 participants and 100 speakers thronged the HKEX's Connect Hall at Exchange Square for the FII Priority summit on Thursday and Friday. It was a "significant step" in the deepening ties between Hong Kong and the Middle East, particularly with Saudi Arabia, said Hong Kong Chief Executive John Lee Ka-chiu, after joining the opening ceremony with FII chief executive Richard Attias.

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The FII conferences "started in 2017 with a thought: a global conference for the world", Rumayyan said in his opening remarks at the conference.

"We decided to bring the first Asia conference here because Hong Kong is a global city, and it is a major hub in Asia," he said.

He has reasons for optimism. Asia makes up 52 per cent of the growth in technology revenue, 43 per cent of global start-up funding and 88 per cent of patents filed, according to Rumayyan, data that underscored how the "economic centre of gravity" is moving towards Asia, said Fung Group chairman Victor Fung.

Rumayyan is a financier who wears many keffiyeh, as the Middle East headdress is called: he is the governor of the US$700 billion Public Investment Fund (PIF) and chairs Saudi Aramco, as well as the Newcastle United Football Club, in addition to holding board seats at SoftBank Group and Reliance Industries.

The gong strike was a ritual that the HKEX would have arranged for Rumayyan four years earlier, almost to the day, when Aramco was planning its initial public offering. Instead, the Saudi state oil company raised US$25.6 billion on the Tadawul exchange in Riyadh, in what still stands as the largest fundraising exercise in global finance.

That sale, which involved 1.5 per cent of the world's largest company by value, left plenty of stock to go around. Financial centres from New York to London to Hong Kong had been wooing Aramco ever since to host its follow-up stock sales.

While an additional sale is eagerly anticipated, it is not likely to happen any time soon, as record interest rates weighed on global equities and sapped investors' appetites for new issues.

Still, preparations had been under way. HKEX signed an agreement to collaborate with Tadawul in February, and followed up six months later by creating shortcuts for Saudi-listed companies to apply for secondary listings in Hong Kong. Shanghai's exchange also signed a deal with Tadawul in September for the potential to work on cross-listings.

Collaborations extended beyond the stock market. The Saudi central bank is an observer of the m-Bridge pilot project for trade finance, using digital currencies issued by the central banks of China, Hong Kong, Thailand and the United Arab Emirates. The People's Bank of China agreed on a three-year, 50 billion yuan (US$7 billion) currency swap with the Saudi central bank, paving the way for trade between the two nations to be conducted in yuan and riyals.

Last week, hot on the heels of kicking off the FII Priority, Hong Kong and Saudi Arabia signed a memorandum of understanding to negotiate an investment promotion and protection agreement.

Underpinning this spate of agreements is the closer political relationship between Beijing and Riyadh, with Hong Kong acting as what Lee called the "value-added superconnector" in between. Lee was in Riyadh in February, soon after the December 2022 visit by President Xi Jinping.

The FII Institute, whose agenda is "Impact on Humanity", extends beyond Saudi-China or Saudi-Hong Kong relations. Its Board of Changemakers, the highlight and set piece of the two-day conference, addressed the question of whether innovation and collective action can uncover opportunities to advance societal well-being and shared prosperity.

"I worry about the ability of people to adjust to new technology," said Hang Lung Properties chairman Ronnie Chan, in a panel discussion moderated by Professor Tony Chan, the president of the King Abdullah University of Science and Technology, and a trustee of the FII Institute.

Referring to what he called the "J-curve of technology", Ronnie Chan asked aloud whether the world was ready for the challenges and opportunities brought by such advances as artificial intelligence (AI) and genetic engineering.

AI was by far the most-talked-about topic at the conference, as the world grapples with the endless possibilities of AI-powered deep fakes and the astounding feats of large language systems such as ChatGPT.

AI can be a significant tool for uplifting humanity and serving the common good, provided that the right regulations and a human-centric approach to its development are in place, said Vatom Corporation founder and CEO Eric Pulier.

Green technology, environmental, social, and governance and climate change were also hot concerns. Technology that holds the key to solving the climate crisis needs more government support and funding from diverse players in the private sector to ensure its successful commercialisation, attendees said.

"Sustainability is the defining challenge in our century, but also the biggest trillion-dollar opportunity," said AlphaTrio Capital founding managing partner Poman Lo.

"The only way we can drive this transition is by leveraging technology, which ... can turn [climate] risks into opportunities."

For now, the most immediate opportunities lie in the inaugural exchange-traded fund of Saudi stocks that began trading in Hong Kong on November 29. The Saudi exchange-traded fund, managed by CSOP Asset Management, fell 0.4 per cent amid the Hang Seng Index's 3 per cent slump in the declining market.

Illustration: Lau Ka-kuen alt=Illustration: Lau Ka-kuen>

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Dalio, a self-proclaimed Sinophile, used a Chinese idiom, "Smart Rabbit has three burrows", while making his point to delegates at the 7th Future Investment Initiative (FII), the annual conference which is often referred to as "Davos in the Desert", where admission requires membership at US$15,000 a pop.

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Collaboration is the bedrock of innovation as the world works towards a sustainable future, FII Institute CEO Richard Attias says

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'Economic centre of gravity is moving towards Asia,' business leaders hear

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Hong Kong's governing principle 'enables city to play key role in shaping trends'

Number of fintech companies in city has risen by 25 per cent in just a year, city leader John Lee says in keynote speech at FII Priority Hong Kong conference

Lee touts city's deepening ties with Saudi Arabia, says both economies are negotiating investment promotion and protection agreement

Hong Kong's "one country, two systems" governing principle has enabled it to play a bigger role than its size would suggest on the global stage in finance, innovation and building a sustainable future, the city's leader has said, stressing the number of fintech companies setting up locally has risen by 25 per cent in just a year.

During his keynote speech on Thursday at the FII Priority Hong Kong conference, Chief Executive John Lee Ka-chiu also said ties between the city and Saudi Arabia were deepening and both economies were negotiating an investment protection agreement.

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This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2023 South China Morning Post Publishers Ltd. All rights reserved.

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