The Abu Dhabi Investment Authority (Adia), one of the world's largest sovereign wealth funds, said that it was upbeat about the economic outlook for China and would be open to more investments there.
Sheikh Hamed bin Zayed, Adia's managing director, told China Finance, a bimonthly journal, that steps to liberalise financial markets in China were promising and could lead to more investments in listed companies, fixed income, real estate and private equity.
“Broadly speaking, we remain optimistic about the outlook for China and the government’s ability to steer the country’s economic transition in a skilled and measured way,” Sheikh Hamed said.
“We have proven this through our unwavering commitment to the market, which will continue as we seek to identify investment opportunities that are aligned with China’s evolving needs.”
Sheikh Hamed's interview with China Finance comes on the heels of the wealth fund's opening of a new office in Hong Kong in October to tap growth in Asian emerging markets amid what Adia says is slowing growth and asset valuations that have been inflated by low interest rates.
The fund, however, still remains bullish on emerging markets, he said.
“While global growth remains generally subdued, especially in developed markets, both equity and bond returns have been solidly positive,” he said.
“This is welcome news, but our view remains that at current levels financial assets appear generously valued, which suggests we may be faced with a period of more subdued returns going forward. We also have concerns about the impact of ultra-low, or even negative, interest rates being used in some parts of the world.”
Adia started investing in China in 1992 when the market was first opened to foreign investors and its portfolio there includes a US$2.5 billion Qualified Foreign Institutional Investor allocation to the China A market, as well as additional investments in China B shares and shares in China-focused companies listed on stock exchanges including Hong Kong and New York.
Recent market liberalisation measures include new rules that allow foreign investors to access shares listed in Shanghai as well as allowing big international institutions to participate in its interbank bond market.
“China has made important strides in these areas and we remain as confident now as we did 25 years ago in the commitment of China’s leadership to the continued development of the country’s markets,” the Adia managing director said.
“We are always seeking to build mutually beneficial partnerships that can stand the test of time. In equities, we have met with a number of Chinese fund managers who share our objectives and are seeking to build sustainable, world-class businesses. In return, we offer a long-term relationship and a tolerance for relative volatility if we are confident that our visions remain aligned.”
Sheikh Hamed’s bullish comments on China come as the UAE and China foster closer ties in the wake of a three-day official visit to China in December 2015 by Sheikh Mohammed bin Zayed, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the Armed Forces.
During that trip, Mubadala said it would launch a joint fund worth $10bn with two Chinese state institutions to invest in sectors with strategic importance for the UAE and China.
mkassem@thenational.ae
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