The green light clears the way for VCFC, a joint venture between China-backed Valuable Capital Group Limited (VCGL) and eWTP Arabia Capital, to expand its presence in the Saudi Arabian financial market and target a population of local individual investors that is estimated to top 6 million.
VCFC plans to expand its service offering in Saudi Arabia to include investment banking, asset management and mutual funds, said Jess Cheung, co-founder and CEO of VCGL. That is subject to further regulatory approvals.
“It is the first brokerage house in Saudi Arabia to have developed its systems entirely in-house, from back end to front end,” Cheung told the Post.
The broker sees tremendous potential in Saudi Arabia’s growing economy and its financial and trading markets, which present fewer competitors than Hong Kong’s.
“We are the 32nd brokerage firm in the [Saudi Arabia] exchange,” he said, compared with more than 600 competitors in Hong Kong.
VCGL, which is part of the China-based Sina Group, is a Hong Kong-based provider of online brokerage, asset and wealth management, and equity financing services. It operates in Hong Kong, China, Singapore, Australia, New Zealand and the United States.
The Saudi Arabian market presents opportunities for new services and business models, as it is still relatively new compared to mature financial markets worldwide, according to Cheung.
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“When it comes to certain services, they have never existed in [Saudi Arabia] yet,” Cheung said. “We are able to bring in the experience and bring in a new business model.”
VCFC’s long-term goal involves bringing capital from Saudi Arabia to Hong Kong and mainland China.
The young population also makes fintech more popular. “Over 70 per cent of the population is under 30 years old,” Cheung said. “So the young generation is very proactive.”
As the world’s top oil exporter, Saudi Arabia’s economy is by far the largest in the Gulf Cooperation Council, which also counts as members Bahrain, Kuwait, Oman, Qatar and the United Arab Emirates (UAE).
Saudi Arabia seeks closer ties with central banks of China, Hong Kong
Saudi Arabia seeks closer ties with central banks of China, Hong Kong
Saudi Arabia’s 2022 gross domestic product is more than double that of the UAE, the second largest economy in the alliance. In the stock market, the most heavily weighted industry is financial firms, with banks comprising half of the top 10 index constituents, according to a report issued by the London Stock Exchange early this year.
Saudi Arabia’s financial policies generally facilitate the free flow of private capital, and currency can be transferred in and out of the country without restriction, according to a 2023 US Department of State report on the nation’s investment climate. Saudi Arabia created a market regulator, the Capital Market Authority, in 2004 and opened the Saudi stock exchange, Tadawul, to public investment.
Despite these investment opportunities, investor concerns persist regarding business predictability, transparency and political risk, the report said.