On the second day of the first two Saudi ETFs being listed, they have already achieved two consecutive boards. As of today's close, Huatai Bairui Fund and Southern Fund's Saudi ETFs have both received two consecutive boards, with turnovers of 151 billion yuan and 738 million yuan, and turnover ratios of 200.56% and 98.26%, respectively. The latest premium discount ratios are 15.78% and 15.64%, respectively, which are currently the two ETFs with the highest premium discount ratios in A shares.

The previously popular Invesco China long city fund NASDAQ technology ETF has fallen to third place, with the latest premium discount ratio of 13.05%.

Unlike the cross-border ETFs we are familiar with, these two Saudi ETFs belong to the interlaced ETFs, and the underlying assets are the Southern Dongying Saudi Arabia ETF (CSOP Saudi Arabia ETF) listed in Hong Kong. By investing in interlaced underlying ETFs, it achieves close tracking of the FTSE Saudi Arabia Index.

In other words, for investors, buying these two ETFs in A shares is equivalent to buying Southern Dongying Saudi Arabia ETF in Hong Kong through QDII channel. For the issuing fund companies, taking the raised funds to purchase Southern Dongying Saudi Arabia ETF listed in Hong Kong.

It is worth mentioning that Southern Dongying Saudi Arabia ETF was listed in Hong Kong in November last year. It is the first ETF in the Asia-Pacific region to track Saudi stocks, with the largest asset scale of similar products in the world. And Southern Dongying Saudi Arabia ETF can be traded directly in HKD or RMB.

From the perspective of the establishment, as of July 9th, the fair value of the interlacing underlying Southern Dongying Saudi Arabia ETF held by the two Saudi ETFs was 29.5 billion yuan and 30.6 billion yuan, accounting for 50.54% and 48.63% of the fund's net asset value, respectively.

As an interlaced ETF product, Huatai Bairui Southern Dongying Saudi Arabia ETF's interlaced "partner" has also been launched synchronously.

On July 10th, the Hong Kong Stock Exchange website showed that Southern Dongying Huatai Bairui CSI 300 Index ETF was first sold from July 10th to July 12th, and Southern Dongying has made an application to the Hong Kong Stock Exchange regarding the listing of Southern Dongying Huatai Bairui CSI 300 Index ETF units and approval for trading.

So what are interlaced ETFs? Why do we need interlaced ETFs when we have interconnection ETFs?

Interlaced ETF refers to fund management institutions in different markets each issuing a listed exchange-traded fund (ETF), and buying each other's ETF in the secondary market. This mechanism allows investors to invest in stocks or indexes in the other market through the local market, thus realizing cross-border investment.

This means that interlaced ETFs reduce the investment threshold and enable investors to invest without opening an account in the other market.

Charles Li Xiaojia, former CEO of Hong Kong Exchanges and Clearing, said in October 2020 that ETF interlacing can increase the liquidity of the two markets and provide more diversified investment opportunities for the two markets. ETF interlacing opens a new chapter for the development of cross-border ETF markets.

In recent years, the China Securities Regulatory Commission has successively connected interconnection ETFs with Japan, Shenzhen-Hong Kong, Shanghai-Hong Kong, and China-Singapore. A group of interlaced ETF products have emerged, and interconnection is performed between them.

On June 25, 2019, the Shanghai Stock Exchange and the Japan Exchange Group held the opening ceremony of the Sino-Japanese ETF interconnection. Four Sino-Japanese ETF interconnection products from E Fund, Huaxia, Southern and Huaxia Fund were listed on the Shanghai Stock Exchange. On the same day, the first two ETFs issued in Japan that invested in China's flagship index were successfully listed and traded on the Tokyo Stock Exchange.

In April 2021, Sino-Japanese ETF interconnection products landed on the Shenzhen Stock Exchange. ETF products that track the Nikkei 225 Index and the innovation 100 index of the Guangdong-Hong Kong-Macao Greater Bay Area were listed and traded on the Shenzhen Stock Exchange and the Tokyo Stock Exchange, respectively.

Shenzhen-Hong Kong, Shanghai-Hong Kong, China-Singapore and other interconnection ETFs have also landed one after another. On August 28, 2020, Hong Kong and mainland China ETF interlacing were listed on the Hong Kong Stock Exchange and the Shenzhen Stock Exchange. Among them, the ETFs approved by the Hong Kong Securities Regulatory Commission will invest 90% or more of their total net asset value in an ETF approved by the China Securities Regulatory Commission and currently listed on the Shenzhen Stock Exchange through the RMB Qualified Foreign Institutional Investor (RQFII) qualification. The ETF approved by the China Securities Regulatory Commission will invest at least 90% of its assets in an ETF approved by the Hong Kong Securities Regulatory Commission and currently listed on the Stock Exchange through the Qualified Domestic Institutional Investor (QDII) qualification.

On October 23, 2020, the first batch of Shenzhen-Hong Kong ETFs' mutual products officially landed. Jia Shi Hang Seng China Enterprises ETF and Yin Hua ICBC CSOP S&P China New Economy Industry ETF were listed on the Shenzhen Stock Exchange, while Hang Seng Jia Shi Hushen 300 ETF, Southern Dongying Yin Hua Zhongzheng 5G Communication Theme ETF were listed on the Hong Kong Stock Exchange.

On June 1, 2021, Shanghai-Hong Kong ETF officially entered the era of "mutual connectivity", with the first pair being Huatai Bairui Southern Dongying Hang Seng Technology ETF (QDII) and Southern Dongying Huatai Bairui Photovoltaic Industry ETF.

By the end of 2022, the first pair of bidirectional products of the China-Singapore ETF connectivity are Southern Basic Fund Southern Dongying Yinhe Lianchang FTSE Asia Pacific Low Carbon Select ETF and Southern Dongying Southern Zhongzheng Technology Innovation and Entrepreneurship 50 Index ETF, which were successfully listed on the Shenzhen Stock Exchange and the Singapore Exchange respectively.

In 2023, the first pair of Shanghai-New establishment of the mutual connection of products, Huatai Bairui Southern Dongying New Exchange Pan-Southeast Asia Technology ETF and Southern Dongying Huatai Bairui SSE Dividend ETF were simultaneously listed on the Shanghai Stock Exchange and the Singapore Exchange.

Therefore, there are currently 12 mutual ETF products with A shares, namely, Saudi ETF, New Economic ETF, Harvest China Enterprises ETF(QDII), Hang Seng Tech Index ETF, ChinaAMC Nomura N225 ETF(QDII), Huaan MUFG N225 ETF(QDII), China Southern Peak Topix ETF(QDII), Southeast Asia Technology ETF and Asia Pacific Selections ETF.