By Summer Zhen

HONG KONG, Sept 17 (Reuters) - Saudi Arabia has granted approval for its first exchange-traded funds (ETFs) tracking equities listed in Hong Kong on Tuesday, the Capital Market Authority $(CMA)$ said, marking the debut of such a product in the Middle East.

The move follows efforts by Beijing and Hong Kong to deepen ties with Arab countries in response to escalating tensions with the West.

Saudi Arabia's CMA said in a statement it approved local asset manager AlBilad Investment Company's request to offer "Albilad CSOP MSCI Hong Kong China Equity ETF" units on the Saudi Stock Exchange (Tadawul). However, the regulator did not disclose the fund's launch schedule.

The ETF is a collaborative effort with Hong Kong's CSOP Asset Management, and focused on Hong Kong-listed companies including Chinese firms traded in the city.

Last November, Hong Kong launched Asia's first ETF tracking Saudi equities - CSOP Saudi Arabia ETF - and has been actively seeking cross-listing opportunities in both capital markets.

The Hong Kong-listed ETF's size has expanded to nearly HK$10 billion ($1.28 billion).

In June, Julia Leung, CEO of Hong Kong's Securities and Futures Commission $(SFC.AU)$, visited Saudi Arabia to meet officials and discuss the potential listing of the ETFs on each other's exchanges.

China also approved its first two mainland listed ETFs tracking Hong Kong's CSOP Saudi Arabia ETF in June, seeking to further strengthen financial sector cooperation between the two regions and provide Chinese investors exposure to Middle East companies.

($1 = 7.7899 Hong Kong dollars)

(Reporting by Summer Zhen; Editing by Jacqueline Wong)

((summer.zhen@thomsonreuters.com; 852-3462-7739;))