Middle East sovereign wealth funds (SWF) accelerated the flow of capital into China in 2023, spending about $2.3 billion last year, according to figures released by the Hong Kong Monetary Authority (HKMA).

The number represented a significant increase from the $100 million spent in 2022, according to HKMA’s external executive director Kenneth Hui, Bloomberg reported.

Hui revealed at a conference that this growth stemmed from financial institutions and regulators making trips to the Gulf region to engage with the market last year, which was served by Europe before, Bloomberg reported.

“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.

Hong Kong has been courting state-backed institutions from the GCC with favourable government policies and the organisation’s leverage with China in a bid to revive its weakest IPO market since the global financial crisis.

In recent years, UAE and Saudi Arabia have emerged as dominant players on the landscape, with Abu Dhabi’s sovereign wealth fund first opening its office in Hong Kong in 2016. 

Saudi Arabia and its $940 billion sovereign-backed Public Investment Fund (PIF) has accelerated this impetus further since 2022, with offices in Hong Kong and China.

“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 told Zawya in May. “Gulf sovereign wealth funds have been making tangible steps to realise the two-way investment corridor with Hong Kong as a gateway to China.”

(Writing by Bindu Rai, editing be Seban Scaria)