Gulf sovereign wealth funds invest $2.3 billion in China

Cash from Gulf sovereign wealth funds is pouring into China and Southeast Asia as the region’s deep pockets look beyond the U.S. and Europe for investment targets.

About $2.3 billion of sovereign capital from the Middle East flowed into the greater China market last year, the Hong Kong Monetary Authority’s Kenneth Hui said at a conference on Monday.

That figure is up from about $100 million in 2022, said Hui, the external executive director of Hong Kong’s central bank, citing data from Global SWF. 

Chinese financiers and regulators have made frequent trips to engage with the Gulf market, which traditionally was served by Europe, Hui added.

“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 said. “This money is important because they often create good demonstrative effect to their local industry and the general public.”

Meanwhile, Southeast Asia is also getting a piece of the action as Middle Eastern institutional investors eye fast-growing economies such as Vietnam amid growing tensions between China and the West, according to TVM Capital Healthcare, a Dubai and Singapore dual-headquartered private equity firm. 

“Given the political developments with China and the United States, Middle Eastern countries are trying to stay fairly neutral and develop deep ties with everybody, including and in particular Southeast Asian nations,” said Helmut Schuehsler, Chairman and CEO at TVM Capital Healthcare after his firm announced the closing of its second Middle East fund, which drew $250 million last month.

The TVM Healthcare Afiyah Fund LP saw the participation of institutional investors from Gulf countries and Europe, led by Jada Fund of Funds, a subsidiary of the Public Investment Fund of Saudi Arabia, and Saudi Venture Capital.

TVM Capital Healthcare is also raising a separate Southeast Asia fund with a target size of $150 million to $200 million. The new fund, which has commitments from two lead investors from the Middle East, is expected to have its initial closing, the first time that investors commit to making their investment in the fund, by the end of this year, the South China Morning Post reported.