As Middle Eastern sovereign wealth funds expand their global portfolios, many are boosting their investments in China as part of efforts to promote diversification and gain access to technology.
Several funds, notably the UAE’s Mubadala and Riyadh-based Public Investment Fund, have opened offices in the Asian country in recent years as they navigate the challenges of operating in the world’s second-largest economy.
About $2.3 billion of sovereign capital from the Middle East flowed into the greater China market last year, the external executive director of Hong Kong’s Central Bank Kenneth Hui said at a conference last month.
That figure was up from about $100 million in 2022, local media cited Mr Hui as saying.
“Middle Eastern SWF investments into China is more the eventual result of some funds opening offices in Hong Kong, China, and other Asian countries as well as a desire to diversify the geographic distribution of assets,” said Robert Mogielnicki, a senior resident scholar at the Arab Gulf States Institute in Washington.
Last year, the US was the top region of focus for the 10 biggest state-owned investors in the world, with investments reaching $82.9 billion, followed by India at $16.7 billion, and Saudi Arabia attracting $15.9 billion, according to a report by Global SWF.
China was among the biggest gainers last year, with funds invested by state-owned investors rising 333 per cent year-on-year to $8.3 billion, the report showed.
“We’re not seeing numbers that reflect a major paradigm shift in where and how SWFs invest,” Mr Mogielnicki told The National.
“It’s more like SWF officials are slowly figuring out the best way to make Chinese assets a slightly larger part of their investment portfolios,” he said.
Investing in stocks
State-owned funds based in the GCC have been investing in listed Chinese equities, drawn by the potential of the market and the increasing significance of the renminbi.
The Kuwait Investment Authority is in the top 10 list of shareholders in 30 A-share companies, with a total market value of 4.52 billion yuan ($2.33 billion), China’s Global Times reported in May, citing third-party industry data.
A-shares are stocks of Chinese companies traded on the Shanghai or Shenzhen stock exchanges, priced in yuan. Previously, foreign access to A-shares was limited, but initiatives such as the Qualified Foreign Institutional Investor programme and the Shanghai-Hong Kong Stock Connect have since opened the market to international investors.
The Hong Kong Stock Exchange, considered a gateway for international investors trying to access Chinese companies, has been seeking to collaborate with Middle East bourses, which have seen a string of high-profile initial public offerings over the past few years.
This month, HKEX announced that it added the Abu Dhabi Securities Exchange and the Dubai Financial Market as recognised stock exchanges.
The move is expected to let public joint stock companies that are listed on the main market of the two UAE exchanges apply for a secondary listing in Hong Kong.
“HKEX is committed to further expanding its international reach, with an aim of attracting more investors and issuers from around the world to our markets,” an official told The National last month.
“HKEX is pleased to be continuing our engagements in the Middle East.”
Tech transfers
Some funds are investing in crucial technologies in areas such as artificial intelligence and semiconductors that can drive economic diversification in their own countries.
In May, Alat, a subsidiary of Riyadh-based PIF, announced that it would invest $2 billion in Chinese Lenovo’s convertible bond in exchange for the company opening a manufacturing centre in the kingdom.
“The Middle Eastern SWFs are not solely made to earn a return but with the expectation that technology transfer and reinvestment will come from China through them, which are needed for their economic diversification,” said Shigeto Kondo, a senior researcher at the Jime Centre in Japan's Institute of Energy Economics.
“Strong government-to-government engagement between the Middle East and China over the past couple of years also doesn’t hurt here,” Mr Kondo told The National.
However, China's push into emerging technology has led the US to become increasingly concerned about the movement of sensitive chip technology to and from the Asian nation.
“Historically, the transfer of military technology, such as from Israel to China, has been a main concern for the US, but now, fields like AI and semiconductors have also become concerns,” Mr Kondo said.
However, the Middle East has also been focusing on growing its tech collaboration with the US.
Tech firms such as Microsoft, Google, and Cisco have all established a strong presence in the region.
In April, Abu Dhabi artificial intelligence and cloud company G42 also received a $1.5 billion investment from Microsoft, which is expected to grow G42's global expansion plans and strengthen the UAE's position as a global technology hub.
Geopolitical tensions
Geopolitical tensions in the Middle East and beyond are the biggest risk for global sovereign investors, outflanking inflation as their primary concern for continued economic momentum, a recent study found.
Eighty-three per cent of global SWFs, including 95 per cent of those from the broader Middle East region, consider conflict as the prime factor that could derail global growth over the next year, asset manager Invesco said in its annual Global Sovereign Asset Management Study this month.
Tensions, particularly in regions such as the Middle East, Ukraine, and between major powers like the US and China, are disrupting supply chains, increasing costs and hindering investment.
To mitigate geopolitical risks, investors are now inclined to explore opportunities in the fast-growing emerging market assets, said the report, which surveyed 140 investment officials at 83 sovereign wealth funds and 57 central banks, managing a combined $22 trillion in assets.
The International Monetary Fund also said this month that Asia's emerging market economies have continued to be the “main engine for the global economy” this year.
The fund also revised growth projections upwards for China and India, which together represent about half of global growth.
COMPANY PROFILE
Founders: Alhaan Ahmed, Alyina Ahmed and Maximo Tettamanzi
Total funding: Self funded
Libya's Gold
UN Panel of Experts found regime secretly sold a fifth of the country's gold reserves.
The panel’s 2017 report followed a trail to West Africa where large sums of cash and gold were hidden by Abdullah Al Senussi, Qaddafi’s former intelligence chief, in 2011.
Cases filled with cash that was said to amount to $560m in 100 dollar notes, that was kept by a group of Libyans in Ouagadougou, Burkina Faso.
A second stash was said to have been held in Accra, Ghana, inside boxes at the local offices of an international human rights organisation based in France.
Navdeep Suri, India's Ambassador to the UAE
There has been a longstanding need from the Indian community to have a religious premises where they can practise their beliefs. Currently there is a very, very small temple in Bur Dubai and the community has outgrown this. So this will be a major temple and open to all denominations and a place should reflect India’s diversity.
It fits so well into the UAE’s own commitment to tolerance and pluralism and coming in the year of tolerance gives it that extra dimension.
What we will see on April 20 is the foundation ceremony and we expect a pretty broad cross section of the Indian community to be present, both from the UAE and abroad. The Hindu group that is building the temple will have their holiest leader attending – and we expect very senior representation from the leadership of the UAE.
When the designs were taken to the leadership, there were two clear options. There was a New Jersey model with a rectangular structure with the temple recessed inside so it was not too visible from the outside and another was the Neasden temple in London with the spires in its classical shape. And they said: look we said we wanted a temple so it should look like a temple. So this should be a classical style temple in all its glory.
It is beautifully located - 30 minutes outside of Abu Dhabi and barely 45 minutes to Dubai so it serves the needs of both communities.
This is going to be the big temple where I expect people to come from across the country at major festivals and occasions.
It is hugely important – it will take a couple of years to complete given the scale. It is going to be remarkable and will contribute something not just to the landscape in terms of visual architecture but also to the ethos. Here will be a real representation of UAE’s pluralism.
Avatar: Fire and Ash
Director: James Cameron
Starring: Sam Worthington, Sigourney Weaver, Zoe Saldana
Rating: 4.5/5
Dubai World Cup factbox
Most wins by a trainer: Godolphin’s Saeed bin Suroor(9)
Most wins by a jockey: Jerry Bailey(4)
Most wins by an owner: Godolphin(9)
Most wins by a horse: Godolphin’s Thunder Snow(2)
Tax authority targets shisha levy evasion
The Federal Tax Authority will track shisha imports with electronic markers to protect customers and ensure levies have been paid.
Khalid Ali Al Bustani, director of the tax authority, on Sunday said the move is to "prevent tax evasion and support the authority’s tax collection efforts".
The scheme’s first phase, which came into effect on 1st January, 2019, covers all types of imported and domestically produced and distributed cigarettes. As of May 1, importing any type of cigarettes without the digital marks will be prohibited.
He said the latest phase will see imported and locally produced shisha tobacco tracked by the final quarter of this year.
"The FTA also maintains ongoing communication with concerned companies, to help them adapt their systems to meet our requirements and coordinate between all parties involved," he said.
As with cigarettes, shisha was hit with a 100 per cent tax in October 2017, though manufacturers and cafes absorbed some of the costs to prevent prices doubling.
White hydrogen: Naturally occurring hydrogen
Chromite: Hard, metallic mineral containing iron oxide and chromium oxide
Ultramafic rocks: Dark-coloured rocks rich in magnesium or iron with very low silica content
Ophiolite: A section of the earth’s crust, which is oceanic in nature that has since been uplifted and exposed on land
Olivine: A commonly occurring magnesium iron silicate mineral that derives its name for its olive-green yellow-green colour
The specs
Engine: 4.0-litre V8
Power: 503hp at 6,000rpm
Torque: 685Nm at 2,000rpm
Transmission: 8-speed auto
Price: from Dh850,000
On sale: now
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UAE currency: the story behind the money in your pockets
Pad Man
Dir: R Balki
Starring: Akshay Kumar, Sonam Kapoor, Radhika Apte
Three-and-a-half stars
How does ToTok work?
The calling app is available to download on Google Play and Apple App Store
To successfully install ToTok, users are asked to enter their phone number and then create a nickname.
The app then gives users the option add their existing phone contacts, allowing them to immediately contact people also using the application by video or voice call or via message.
Users can also invite other contacts to download ToTok to allow them to make contact through the app.
Profile of Tarabut Gateway
Founder: Abdulla Almoayed
Based: UAE
Founded: 2017
Number of employees: 35
Sector: FinTech
Raised: $13 million
Backers: Berlin-based venture capital company Target Global, Kingsway, CE Ventures, Entrée Capital, Zamil Investment Group, Global Ventures, Almoayed Technologies and Mad’a Investment.
COMPANY PROFILE
Name: Grubtech
Founders: Mohamed Al Fayed and Mohammed Hammedi
Launched: October 2019
Employees: 50
Financing stage: Seed round (raised $2 million)
Who's who in Yemen conflict
Houthis: Iran-backed rebels who occupy Sanaa and run unrecognised government
Yemeni government: Exiled government in Aden led by eight-member Presidential Leadership Council
Southern Transitional Council: Faction in Yemeni government that seeks autonomy for the south
Habrish 'rebels': Tribal-backed forces feuding with STC over control of oil in government territory
At a glance
Global events: Much of the UK’s economic woes were blamed on “increased global uncertainty”, which can be interpreted as the economic impact of the Ukraine war and the uncertainty over Donald Trump’s tariffs.
Growth forecasts: Cut for 2025 from 2 per cent to 1 per cent. The OBR watchdog also estimated inflation will average 3.2 per cent this year
Welfare: Universal credit health element cut by 50 per cent and frozen for new claimants, building on cuts to the disability and incapacity bill set out earlier this month
Spending cuts: Overall day-to day-spending across government cut by £6.1bn in 2029-30
Tax evasion: Steps to crack down on tax evasion to raise “£6.5bn per year” for the public purse
Defence: New high-tech weaponry, upgrading HM Naval Base in Portsmouth
Housing: Housebuilding to reach its highest in 40 years, with planning reforms helping generate an extra £3.4bn for public finances
The biog
Title: General Practitioner with a speciality in cardiology
Previous jobs: Worked in well-known hospitals Jaslok and Breach Candy in Mumbai, India
Education: Medical degree from the Government Medical College in Nagpur
How it all began: opened his first clinic in Ajman in 1993
Family: a 90-year-old mother, wife and two daughters
Remembers a time when medicines from India were purchased per kilo
The specs: 2018 Volkswagen Teramont
Price, base / as tested Dh137,000 / Dh189,950
Engine 3.6-litre V6
Gearbox Eight-speed automatic
Power 280hp @ 6,200rpm
Torque 360Nm @ 2,750rpm
Fuel economy, combined 11.7L / 100km
The Sand Castle
Director: Matty Brown
Stars: Nadine Labaki, Ziad Bakri, Zain Al Rafeea, Riman Al Rafeea
Rating: 2.5/5
What can you do?
Document everything immediately; including dates, times, locations and witnesses
Seek professional advice from a legal expert
You can report an incident to HR or an immediate supervisor
You can use the Ministry of Human Resources and Emiratisation’s dedicated hotline
In criminal cases, you can contact the police for additional support
