Two exchange-traded funds (ETFs) tracking Saudi Arabian shares extended their gains on Wednesday after launch on the Chinese mainland bourses just one day earlier, highlighting the wider opening-up of China's capital market.

The ETFs, managed by Huatai-PineBridge Investments and Southern Asset Management, respectively, offer Chinese investors an option to broaden their investment portfolio by trading equities in the Middle Eastern state.

Both funds, tracking the FTSE Saudi Arabia Index which covers over 50 medium and large-sized firms, opened on a high note Wednesday and rose by the daily limit of 10 percent during the morning trading session, following 10 percent surges on Tuesday, the first day of launch.

The funds, which raised a total of 1.22 billion yuan (about 171.06 million U.S. dollars), rank among the top Qualified Domestic Institutional Investor (QDII) programs, reflecting the growing appetite of Chinese investors for overseas assets.

Analysts believe that the funds offer Chinese investors a new avenue to diversify their global asset allocation as well as access to the yet-untapped Middle Eastern market.

With the debut of the Saudi Arabia ETF, the cross-border ETF investment destinations on the Shanghai Stock Exchange now include the United States, Germany, France, Japan, South Korea, Singapore, Saudi Arabia and China's Hong Kong.

By the end of May, there were 68 cross-border ETFs listed on the Shanghai bourse, with a total size of 207.5 billion yuan.

In November last year, Asia's very first ETF tracking shares listed in Saudi Arabia launched in Hong Kong, which analysts described as a milestone in Hong Kong's financial cooperation with Saudi Arabia and no less a landmark of financial connectivity along the Belt and Road.

China has long been working to expand the two-way opening-up of its capital market. The latest step came as the country recently granted quotas totaling 2.27 billion U.S. dollars to 53 institutions under the QDII program, a prominent channel allowing Chinese investors to trade overseas securities within a prescribed quota.

The move aims to meet the reasonable demand of Chinese residents for overseas investment, said Zhu Hexin, deputy governor of the People's Bank of China, in a financial forum held last month in Shanghai, urging efforts to promote the cross-border investment business of equity investment funds.

Earlier, the Shanghai and Shenzhen bourses signed agreements with Saudi Tadawul Group in September and December last year, respectively, to enhance capital market links and explore potential cooperation opportunities in cross-listing, fintech, data exchange and research, among other areas.

The Shanghai Stock Exchange has vowed to further expand and improve cross-border connectivity mechanisms in the capital market, and steadily promote high-level institutional opening-up of the capital market.

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