The Gulf Cooperation Council has been competing in Hong Kong’s capital markets with the help of many favorable government policies and the organization’s clout with China. This has made a positive impact, attracting the attention of both state-owned funds and from well-known investors. Hong Kong is hopeful to develop closer financial ties with Saudi Arabia by jointly launching an exchange-traded fund that tracks Hong Kong stock indices. If successful, the venture could deepen economic links between the markets of the two countries while also providing China with improved access to Gulf investments.
At last week’s Capital Market Forum, Michael Wong, Hong Kong’s deputy financial secretary, revealed that plans were underway with regional institutions to list the proposed ETF in the Middle East. Some viewed this as a prudent move to strengthen bilateral bonds at a time when geopolitical uncertainties abound. Meanwhile, sponsors envision the product satisfying investors’ appetite for diversified exposure across an influential Asian hub and the burgeoning Saudi bourse. Whether it ultimately sees the light of day remains to be seen, but the notion of cooperative development over divisions rings appealing amid broadening strains in international relations.
The Hong Kong SAR administration has actively promoted the city as a preferred location for GCC members looking to establish offices, accentuating Hong Kong’s appeal as a center for wealth management activities. Hong Kong retains a strategic position with established comparative advantages in wealth management and private equity, solidifying it as an ideal base for SWFs aiming to penetrate the Chinese market.
Saudi Arabia and the United Arab Emirates have emerged as major participants in the investing space. In 2016, Abu Dhabi’s state-sponsored wealth fund began operations out of an office in Hong Kong, opening up new markets in China and other Asian countries. Since 2022, Saudi Arabia has increased its momentum with the help of its $700 billion state-owned PIF, which has offices in China and Hong Kong.
According to reports, the GCC, mainland China, and Hong Kong are still involved, which will likely lead to more investments being made in the industry. Further, the Gulf-backed funds have taken substantial steps to realize the partnership with Hong Kong. As the investment capital reaches $10 trillion, Nicolas Aguzin said that between 10% and 20% of investment will be allocated in China. Dubai’s Sheikh Ali Al Maktoum, a member of the ruling family of UAE, has also decided to open a 500 million dollars worth office for his family business in Hong Kong by the end of this month.
As American capitalists started pulling back from China deals due to growing disputes, Gulf country companies spotted a chance to get involved at bargain prices while growth slowed. To draw in outsiders with money, the Hong Kong administration unveiled a special residence permit option in March for those putting investments into endorsed endeavors.
According to a Financial Times article that month, Abu Dhabi’s sovereign wealth fund had their eyes peeled for discounted acquisition potentials of shares Westerners bail on within investment vehicles overseen by PAG, an alternative asset management powerhouse operating from Hong Kong with over $55 billion under supervision.
The New Capital Investment Entrant Scheme is an initiative by China to draw in more investors to the region, and institutional investors continue to be the largest investors in it, according to Julian Wentzel, Head of Global Banking in North Africa, Middle East, and Türkiye at HSBC, who spoke with Zawya. Although some investors aim to expand their investment horizons beyond the region by venturing into industries such as sustainability, artificial intelligence, electric vehicles, and healthcare, others, such as Saudi investors, are driven by the desire to generate wealth for their nation.
