A notable trend is emerging in the investment strategies of Gulf Cooperation Council (GCC) sovereign wealth funds. Traditionally known for investing in Western markets, these funds increasingly focus on China.

According to Nicolas Aguzin, the CEO of Hong Kong Exchanges and Clearing (HKEX), China is expected to attract approximately $2 trillion in sovereign investments from the Middle East by 2030. Aguzin further predicts that the total investment capital from regional state funds in the Middle East will likely reach $10 trillion by the decade’s end. This projection highlights the significant economic ties between China and the Middle East, indicating a growing trend of substantial investments flowing into China from the region.

The chief executive of the Hong Kong Stock Exchange (HKEX), Nicolas Aguzin, has stated that China is expected to attract investments ranging from $1 trillion to $2 trillion from leading sovereign funds in the Middle East by 2030. As these sovereign funds witness a rapid increase in their investment capital, they seek to shift their focus towards Asia, particularly China. Only a tiny portion of the region’s $4 trillion investment capital is allocated to Asia, but this is projected to change. By the end of the decade, the total investment capital of the Middle East sovereign funds is estimated to reach $10 trillion, with approximately 10% to 20% of that amount expected to be invested in China. This reallocation of investments indicates the growing economic ties between the Middle East and China, with the Middle East sovereign funds actively seeking long-term returns by investing in China’s flourishing market.

Sovereign funds within the Gulf Cooperation Council (GCC), including prominent entities like the Public Investment Fund in Saudi Arabia, Qatar Investment Authority, Kuwait Investment Authority, Abu Dhabi Investment Authority, and Mubadala Investment Company in the UAE, utilize the region’s hydrocarbon wealth to invest across various asset classes globally.

These sovereign funds, which hold substantial stakes in publicly listed companies worldwide, are now shifting their focus to the broader Asian region, particularly China, due to its robust economic growth that surpasses the global average.

According to Nicolas Aguzin, China presents a unique opportunity for Middle Eastern countries to tap into the rapid development of the Chinese capital market. The massive size of China’s domestic savings, both retail and institutional, further contributes to its attractiveness as an investment destination.

While this investment capital has primarily been focused on opportunities within China’s domestic market, the growing economic ties between China and approximately 140 economies worldwide, including the Arab world, suggest that this capital will gradually flow out of China and into markets in the East and West. This development holds promising implications for trade and investment in the Middle East. GCC sovereign funds seek to diversify their investment portfolios and reduce reliance on traditional Western markets. China’s rapidly growing economy, large consumer base, and expanding middle class present attractive opportunities for investment diversification.

Khalid Al Falih, Saudi Arabia’s Minister of Investment, emphasized the rapid growth of economic ties between China and the Arab world, particularly Saudi Arabia. He highlighted the significant potential for further development, explicitly strengthening capital market relations between the two countries.

The increasing economic integration between China and the Arab world, fueled by the redirection of sovereign investments and the expansion of capital market relations, sets the stage for enhanced cooperation and mutual benefits in the years to come.

The increased investment flow from GCC sovereign funds to China strengthens economic ties between the GCC and China. It fosters mutually beneficial partnerships, promotes trade diversification, and facilitates technology transfer, benefiting both parties.