Mideast sovereign wealth fund flows to China up 2.2k% y-o-y in 2023

The world’s factory is catching the interest of Middle Eastern sovereign wealth funds in a big way: Middle East sovereign wealth funds poured some USD 2.3 bn into Chinese companies in 2023, Bloomberg reports, citing Hong Kong Monetary Authority external executive director Kenneth Hui. To put this in context, the influx of funds represents a 2.2k% y-o-y increase from the USD 100 mn China received in 2022.

When one door closes, another opens: The surge in China-bound funds from our region of the globe comes as the world’s second most populous country found itself increasingly cut off from funds from Europe and the US that had historically been an important source of finance. The EU and US hiked tariffs on Chinese imports in recent years in a bid to contain the country’s rise in sectors that much of the developed world sees as a threat to their own economies.

But wealth funds in the region have signaled that they’re not immune from US pressure: Alat, the USD 100 bn AI and advanced technology investment firm created by Saudi Arabia’s Public Investment Fund, made clear that it would divest from Chinese tech if requested to by the US, EnterpriseAM Saudi reported in May. “So far the requests have been to keep manufacturing and supply chains completely separate, but if the partnerships with China would become a problem for the US, we will divest,” Alat CEO Amit Midha told Bloomberg at the time. US officials have also reportedly asked Saudi to “choose between Chinese and American technology” as they develop a semiconductor industry that forms the backbone of AI technology.

AND- The UAE’s G42 struck earlier this year a partnership with Microsoft after turning its back on Chinese tech under heavy pressure from Washington, as we have previously noted.

MARKETS THIS MORNING-

Major Asian benchmarks are mixed this morning after yesterday’s Nvidia-led tech selloff on Wall Street. US equities futures are flat, and while most major European benchmarks look set to dip at the opening bell.

THE CLOSING BELL-

The ADX rose 0.1% yesterday on turnover of AED 945.78 mn. The index is down 5.8% YTD.

In the green: Abu Dhabi National Energy Company (+5.9%), Alef Education Holding (+5.2%) and Gulf Cement Company (+4.6%).

In the red: Aram Group (-10%), Gulf Medical Projects Company (-9.6%) and Fujairah Cements Industries (-9.3%).

Over on the DFM, the index closed down 0.3% on turnover of AED 355.38 mn. Meanwhile Nasdaq Dubai closed up 0.4%.

CORPORATE ACTIONS-

Dubai construction firm Drake & Scull was added to DFM’s general index, the sharia index, and industrial sector index yesterday, according to a statement.

REMEMBER- Drake & Scull re-listed its shares on DFM in May following a hiatus that began in 2018. Shares soared as much as 30% in trading before closing up 24% at AED 0.31. The firm was re-listed after it completed its restructuring after raising AED 450 mn in a capital increase, which saw the contractor write off over AED 4.18 bn in accumulated debt. The construction firm’s shares were suspended from trading on the back of excessive financial losses and reporting violations.

Crompton Saltini rebrands to Eden in the UAE: Luxury real estate brokerage Crompton Saltini is rebranding in the Emirates to Eden, with the goal of expanding the company beyond its ties to the names of the founders, a press release reads. The company adds that the rebranding does not imply a change in its core service.