Middle East investments in China will expand in amount and scope in 2024 as sovereign wealth funds seek to diversify – banker

“Sovereign funds in the Middle East currently see opportunities in the attractive valuations of Chinese companies, are very bullish on China over the medium to long term, and are looking to strengthen their relationship with China through investment. “There are,” Hoving said.

Meanwhile, investments in consumer-related sectors such as food security and electronics will start accelerating from the second half of 2024, along with other key industries such as oil and gas, infrastructure and manufacturing, he added.

Eyeing ‘role of global player’, UAE seeks closer ties with China through investment

In recent years, Middle Eastern investors have been active in China’s primary and secondary markets, focusing on top performers in the technology, renewable energy and biotechnology sectors, said Huang Xiaoyue, managing director at KPMG. ing.

“These investments are expected to not only generate significant returns but also introduce new technologies to the Middle East that could help upgrade local industries,” she said.

However, investing in Chinese companies comes with many challenges, the main ones being uncertainty regarding exit and market regulation.

“When Middle Eastern countries invest in China, investors want to know what the exit strategy will be in five to seven years, and they need to get used to how that works in China. Some say there is,” Hoving said.

Additionally, we need reciprocity. Middle East sovereign wealth funds are actively investing in China, with the expectation that portfolio companies will bring in sector expertise, hire local workers and, in some cases, reinvest directly in local companies. are doing.

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“Saudi Arabia really wants foreign direct investment.” [FDI]And from their perspective, they want to have the opportunity to be exposed to emerging technologies and critical assets that they may benefit from in the future,” he said. “That’s why they’re open to joint ventures.” [with China]”

For the UAE, the main areas targeted for FDI are real estate, hospitality, leisure, logistics, and attracting high net worth individuals (HNWIs).

“The UAE government is building many schools and many Chinese families want to move to the country,” Hoving said. The country also attracts wealthy families from Western Europe, Africa, India and Pakistan, he added.

For the world’s wealthy, living in the UAE could be “very attractive” from a lifestyle and investment perspective, he said. “Real estate investment is very strong in Dubai. Rental yields are still higher than many other countries in the world, so many people consider the UAE their second home.”

In a bid to attract more professionals and capital, the UAE government will ease its residency policy in 2022, with foreigners owning local property worth more than 2 million UAE dirhams (US$504,000) eligible for 10 years. foreigners who own real estate worth more than 2 million UAE dirhams (US$504,000) can now apply for a renewable residence permit. A minimum of AED 750,000 is required to apply for a two-year permit.

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Similarly, Saudi Arabia this month added a new category for premium residency visas to attract foreign professionals and investments to the country’s real estate market.

“Over the past 12 years, the use of the renminbi in international trade has advanced to a certain level, and we expect this trend to continue.”