According to data released by the Hong Kong Monetary Authority (HKMA), Middle East sovereign wealth funds (SWF) increased the amount of money flowing into China in 2023, spending roughly USD 2.3 billion in that year.
As per Kenneth Hui, the external executive director of HKMA, the amount spent in 2022 was only USD 100 million; this represents a substantial rise, as reported by Bloomberg.
At a conference, Hui disclosed that this expansion was caused by visits made by regulators and financial institutions to the Gulf region in 2023 in order to interact with the market, which was previously supplied by Europe, according to Bloomberg.
“This is the kind of money that we want to see coming in, not just for its own sake, but also for the wider impact,” Hui was quoted by the news agency as saying.
“In an attempt to resurrect its weakest initial public offering (IPO) market since the global financial crisis, Hong Kong has been courting state-backed institutions from the GCC with favourable government policies and the organisation’s leverage with China,” Bloomberg reported further.
Saudi Arabia and the United Arab Emirates (UAE) have emerged as the two main actors in the region in recent years; in 2016, Abu Dhabi’s sovereign wealth fund established its first office in Hong Kong.
Since 2022, Saudi Arabia has increased this momentum even more with the help of its USD 940 billion sovereign-backed Public Investment Fund (PIF), which has offices in China and Hong Kong.
“Government engagements between Hong Kong, mainland China and the GCC continue to set the tone for a supportive investment landscape,” Christina Ma, Head of Global Banking, Asia Pacific at HSBC said, as reported by Zawya.
“Gulf sovereign wealth funds have been making tangible steps to realise the two-way investment corridor with Hong Kong as a gateway to China,” Ma added further.
Meanwhile, in order to support the growth of sustainable financing in the area, the HKMA is thinking of making the banking industry adhere to its green taxonomy framework.