Middle East Funds Chart Stronger Course into Chinese Markets
A significant majority of sovereign wealth funds from the Middle East are poised to increase their investments in Chinese assets over the coming five years, according to the latest findings from Invesco's Global Sovereign Asset Management Study. This shift places China at the forefront of strategic allocation decisions, reflecting growing confidence in its innovation-led sectors.
The study, conducted between January and March and covering funds and central banks managing a combined US$27 trillion, reveals that around 60% of Middle Eastern sovereign wealth funds are planning to boost exposure to China. This places the region only behind Asia‑Pacific and Africa, where 88% and 80% of funds respectively intend to raise allocations. North American counterparts also show strong interest, with approximately 73% signalling intent to increase investment in China.
ADVERTISEMENT
Funds across regions cited strong returns—identified by 71% of respondents—as a key motivator, alongside diversification goals cited by 63% and improved market access for foreigners mentioned by 45%. Chinese innovation sectors, including digital technology, software, advanced manufacturing, automation, and clean energy, are particularly attractive, with 89% indicating interest in digital tech and software, and 70% each for manufacturing and green energy.
Participants in the study included 141 senior investment professionals—chief investment officers, asset-class heads and portfolio strategists—drawn from 83 sovereign wealth funds and 58 central banks globally. The high participation rate lends weight to the findings: China is now ranked as a high or moderate priority for 59% of funds, a notable jump from the previous year.
Despite geopolitical tensions between Washington and Beijing, sovereign funds appear more focused on structural opportunities. North American allocations towards China are framed as strategic, long-term bets in innovation rather than reactive moves to policy friction. As one Invesco executive described, investors appear driven by fear of missing out on China's strides in semiconductors, AI, EVs and renewable energy—'a strategic urgency they once directed toward Silicon Valley'.
A regional lens reveals the Middle Eastern shift as part of a larger recalibration. Sovereign funds in the Gulf and from oil-rich neighbours are increasingly turning to China not just for commodity trades but for diversified returns and access to high-growth sectors. One Middle Eastern fund commented that the credit spectrum in fixed income markets currently offers more attractive risk-adjusted returns than public equities, underlining a broader repositioning.
Globally, sovereign investors are embracing active management, allocating more to fixed income and private credit as markets normalise post ultra-low interest rate era. Thirty‑nine per cent of funds plan to increase fixed income exposure, underscoring a pivot towards liquidity management and resilience. Private credit usage has expanded sharply, from 30% to 44% in direct or co-investments, reflecting growing appetite for yield and portfolio diversification.
Central banks are also reshaping strategy, with 64% planning to grow reserve holdings and 53% aiming to diversify further within two years. Gold remains a popular hedge: almost half intend to expand allocations over the next three years. The dominance of the US dollar persists, with 78% expecting no credible alternative supply within the next two decades.
A modest entrant in the digital asset space, sovereign wealth funds are gradually increasing exposure to digital currencies. Direct allocations rose to 11% from 7% in 2022, most pronounced in the Middle East, Asia‑Pacific and North America. Stablecoins, viewed as more accessible than traditional crypto, are gaining attention among emerging market funds.
China remains a focal point for global sovereign investors seeking exposure to growth-critical sectors and structural diversification. The convergence of strong returns, market access improvements, and sectoral opportunities is driving Middle Eastern and other funds to recalibrate their portfolios. China has transitioned from an optional allocation into a central pillar of future-focused asset strategies, marking a calculated investment pivot amid an evolving global landscape.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The National
7 hours ago
- The National
El Sisi meets Centcom chief in Cairo and reaffirms strong US-Egypt ties
US Central Command (Centcom) chief Gen Michael Kurilla met Egyptian President Abdel Fattah El Sisi in Cairo on Sunday, with both reaffirming the strategic partnership between their countries despite recent strained relations. A statement from the Egyptian presidency underscored the 'strategic depth' of US-Egyptian relations and highlighted that President Donald Trump's attitude towards Cairo was well-intentioned. Discussions focused on strengthening bilateral military and security co-operation, and addressing regional challenges, including efforts to achieve a ceasefire in Gaza and to allow sustained humanitarian aid to the enclave, the presidency said. The meeting, attended by Egypt's Defence Minister Abdel Meguid Saqr and US ambassador Herro Mustafa, also touched on broader regional issues, with Mr El Sisi discussing Egypt's water security and developments in the Horn of Africa. The high-level visit comes after months of uncertainty over US-Egypt relations, exacerbated by disagreements over Israel's war on Gaza. Mr Trump's controversial demand for Egypt to resettle Palestinians from Gaza in its Sinai Peninsula was met with a firm rejection from Cairo, which called the proposal a threat to national security and the Palestinian cause. The US President then ruffled feathers again in April with a demand that American vessels should transit the Suez Canal free of charge. Pro-government Egyptian media dismissed the idea as 'preposterous' and it fuelled speculation over Cairo's growing frustration with Washington's policies. At the same time, Egypt has deepened its ties with other global powers, particularly China, with which it conducted a joint military exhibition at the Giza pyramids in April and May. Cairo also purchased a number of Chinese military hardware. Chinese Prime Minister Li Qiang visited Cairo this month to expand economic and military co-operation, including infrastructure investment and joint military drills. He met government officials, including Mr El Sisi, and business leaders. Egypt's involvement in the Brics bloc and growing reliance on Chinese and Russian arms have signalled a broader shift in its foreign policy. Despite the apparent political discord, US-Egypt economic ties remain significant. In May, the US-Egypt Policy Leaders' Forum highlighted Cairo's efforts to attract American investment, including a proposed US industrial zone in the Suez Canal Economic Zone. US companies have invested more than $47 billion in Egypt in the past 20 years and the two sides continue to prioritise trade and investment, even as political tension persists. Gen Kurilla's visit may also indicate Washington's intent to preserve its $1.3 billion annual military aid package to Egypt, a cornerstone of their relationship since the 1970s. Following the perceived row, questions were raised over the continuation of the military aid package, especially in light of larger funding cuts introduced by Mr Trump's administration since he came to power again in January. His predecessor Joe Biden had halted 10 per cent of the annual aid package to Cairo over Egypt's failure to comply with human rights standards set by the aid agreement. The aid was restored the following year.
Khaleej Times
11 hours ago
- Khaleej Times
Institutional investors warm to crypto but demand still nascent
Bitcoin's surge to a record last week has reignited questions about the role institutional investors are playing in pushing it higher, with analysts suggesting their role is still in its infancy. The world's largest cryptocurrency earlier this week surged to a record above $123,000, receiving a boost on the expectation of pro-crypto policies from Washington. While buzz around digital assets has increased, there is room for demand from institutional investors to grow as pension funds and other long-term buyers add bitcoin to their portfolios, analysts say. On Thursday, the US House of Representatives voted in favour of creating a regulatory framework for the U.S. dollar-pegged cryptocurrency tokens referred to as stablecoins. President Donald Trump is expected to sign that legislation into law on Friday. The House also passed two other key bills related to cryptocurrencies, both of which will now go to the U.S. Senate. "We're still in the early innings when it comes to institutional ownership," said Adrian Fritz, head of research at 21Shares, a digital assets investment firm, adding that retail investors still dominate crypto markets. Less than 5% of all spot bitcoin Exchange Traded Fund assets are held by long-term investors such as pension funds and endowments, with another 10% to 15% owned by hedge funds or wealth management firms, Fritz calculates. The latter group of wealth managers, however, often buy these funds on behalf of high-net worth retail clients, and the bulk of ETF ownership remains retail, he said. There is a correlation between soaring retail purchases of crypto ETFs and crypto-related stocks and a run-up in prices, according to estimates from Vanda, a financial research firm. The data shows retail buyers bought heavily in late 2024 when prices surged after Donald Trump - who has vowed to be a "crypto president" won the U.S. election - as well as during the recent rally. Crypto buyers have been aided by a series of bills U.S. lawmakers are expected to pass this week, the most consequential of which - known as the Genius Act - will define the rules around stablecoins, a fast-growing area of the crypto market. The passage of the crypto legislation on Thursday by the Republican-controlled U.S. House of Representatives paves the way for the first U.S. federal law for digital assets. Some large U.S. lenders, including Bank of America and Citigroup, are also working on launching stablecoins. Another bill will provide regulatory clarity by formally establishing definitions of digital commodities and spelling out the roles of agencies in overseeing digital assets. This could make it easier for institutions that have long avoided the sector to invest. Simon Forster, global co-head of digital assets at trading platform operator and data provider TP ICAP, predicts the number of institutions active in crypto will grow by 2026, including pensions and other buy-and-hold firms. "By definition, they will be the slowest (to enter crypto)," Fritz said. Bitcoin Treasury buying Analysts say data, although patchy given how opaque crypto markets remain, points to the growing role of bitcoin treasury companies in boosting demand. These are listed companies such as Strategy and GameStop, that initially focused on software and videogame retailing respectively but now emphasize owning and making money on bitcoin positions held on their balance sheets in place of cash, gold or ultra-short Treasury securities. Strategy's shares have soared in the past year, far outpacing the rise in bitcoin, with many investors seeing the stock as a way to get exposure to crypto while investing in mainstream financial markets. Juan Leon, research analyst at Bitwise Asset Management, said these companies' ability to buy bitcoin suggests they represent a bigger source of recent demand than pension, endowment and hedge funds that are major players in stock and bond markets. Strategy and GameStop did not respond to requests for comment. Since July last year, public companies worldwide collectively have increased their bitcoin holdings by 120% and now hold just over 859,000, or 4%, of the total 21 million bitcoin that will ever be in existence, said Simon Peters, crypto analyst at investment platform eToro. Companies are also selling common stock, preferred shares and convertible securities to raise funds to spend on boosting their bitcoin holdings, in a bid to replicate Strategy's outsized stock gains. The new wave of U.S. legislation could also pave the way for more listed companies to allocate a portion of their cash reserves to crypto tokens, said Susannah Streeter, head of money and markets at Hargreaves Lansdown. Analysts warn, however, that a drop below $90,000 for bitcoin could put half of these corporate treasuries underwater. Demand for crypto ETFs has also been rising in recent months. Global net inflows into crypto exchange-traded products hit $4 billion last week, the highest so far this year, according to data from crypto firm Bitwise. Among the big institutional investors to have made public their investments in crypto ETFs in the past 18 months are the State of Wisconsin Investment Board, Abu Dhabi's Mubadala sovereign wealth fund and hedge fund Millennium Management, regulatory filings show. So far this year, bitcoin has gained around 25%, compared with the SP 500 index's 6.5% gain. Ether, another cryptocurrency has climbed 2%, while XRP is up nearly 40%. The crypto sector's market capitalization now stands at $3.8 trillion, up nearly 66% since before the U.S. election in November, according to CoinMarketCap.
Khaleej Times
12 hours ago
- Khaleej Times
UAE, US sign statement to accelerate patent granting procedures
UAE and the US signed a statement that seeks to accelerate patent granting procedures in the UAE. This was signed on the sidelines of the 66th Assemblies of the Member States of the World Intellectual Property Organisation (WIPO) in Geneva, by the Ministry of Economy and Tourism and the United States Patent and Trademark Office (USPTO). The Joint Statement of Intent is aimed at launching a bilateral cooperation programme which provides collaborative mechanisms to recognise positive examination results issued by the USPTO for corresponding Emirati patent applications. This will be implemented in accordance with applicable national laws. The focus is on industrial property rights and the development of patent registration procedures that provide flexible and efficient services which support an innovation-driven and entrepreneurial environment. This cooperation reflects the UAE's commitment to enhancing the competitiveness of its intellectual property ecosystem by adopting international best practices, stressed Abdullah bin Touq Al Marri, Minister of Economy and Tourism. He also highlighted that the partnership with the US side represents a new push to accelerate patent issuance by strengthening international cooperation and adopting advanced operational models.
