“Middle East sovereign wealth funds see opportunities in the attractive valuations of Chinese companies right now, and in the medium to long term, they are also bullish on China and want to strengthen ties with the country through investment,” Hoving said.
Meanwhile, investment in consumer-related segments such as food security and electronics will begin to pick up in the second half of 2024, along with other key industries including oil and gas, infrastructure and manufacturing, he added.
Looking at the “role of a global player”, the UAE is seeking closer ties with China through investment
Looking at the “role of a global player”, the UAE is seeking closer ties with China through investment
Middle Eastern investors have been active in China’s primary and secondary markets in recent years, focusing on top performers in the technology, renewable energy and biotech sectors, said Huang Xiaoyue, managing director at KPMG.
“These investments are expected to not only generate significant returns but also introduce new technologies to the Middle East that could help improve local industries,” she said.
Investing in Chinese companies, however, comes with many challenges – chief among them the uncertainty surrounding exit and market regulations.
“When the Middle East invests in China, investors want to know what their exit strategies might be in five to seven years, and there are some who say they need to get used to how it might work in China,” Hoving said.
Also, reciprocity is necessary. As sovereign wealth funds in the Middle East actively pour money into China, they expect portfolio companies to bring expertise to the field, hire local workers and sometimes reinvest directly in local businesses.
Chinese electric car maker Nio gets US$2.2 billion boost from Abu Dhabi
Chinese electric car maker Nio gets US$2.2 billion boost from Abu Dhabi
“Saudi Arabia really wants foreign direct investment [FDI], and from their perspective, they want to get access to emerging technologies or key assets that they could benefit from in the future,” he said. “That is why they are open to joint ventures [with China].”
For the UAE, the target areas for FDI are mainly real estate, hospitality, leisure, logistics and attracting high net worth individuals (HNWI).
“The UAE government is building a lot of schools and you see a lot of Chinese families wanting to move to the country,” Hoving said. The country also attracts wealthy families from Western Europe, Africa, India and Pakistan, he added.
Living in the UAE can be “very attractive” to global HNWIs in terms of lifestyle and investment, he said. “Real estate investment is very good in Dubai. Rental yields are still higher than in many other countries around the world, so many people see the UAE as a second home.”
To attract more professionals and capital, the UAE government relaxed its residency policy in 2022, allowing foreign nationals owning local property worth more than AED 2 million (US$504,000) to apply for a 10-year a renewable residence permit, and those with assets worth more than 750,000 dirhams to apply for a two-year permit.
Hong Kong Archireef links with FAB to restore marine ecosystems in the Middle East
Hong Kong Archireef links with FAB to restore marine ecosystems in the Middle East
Similarly, Saudi Arabia added new categories to its premium residency visa this month in a bid to attract foreign professionals and investment to its local property market.
“Over the past 12 years, the use of the renminbi in the context of international trade has advanced to a decent level, and we expect this trend to continue in the future,” he said.
