Large sovereign funds in the Middle East are enhancing their portfolios with Chinese stocks. Investors believe that "their appetite is increasing with the improvement of trade and diplomatic relations between the two sides."
Abu Dhabi Investment Authority has become a major shareholder in the coal and energy companies "China Shenhua Energy" and "Sigin Mining" in the last quarter of 2022, while also increasing investments in other Chinese stocks.
These investments coincide with intensified efforts in China to attract funds from the Middle East, along with Beijing's initiatives to settle oil contracts in yuan, creating a demand among oil sellers for assets denominated in the Chinese currency. In this context, Jason Hsu, founder of "Raliant Global Advisors" in Hong Kong, stated: "The desire to reduce reliance on the United States increases interest in investing in China and establishing a stronger trade relationship with China, including adopting the petroyuan." He mentioned that he visited Saudi Arabia, Abu Dhabi, Dubai, Oman, and Kuwait to hold meetings with sovereign fund officials and pension funds that "are looking to invest in China."
Chinese President Xi Jinping previously confirmed to the leaders of Gulf Cooperation Council countries that "China will work on purchasing oil and gas in yuan, which may drive further investment."
In contrast, some Western funds remain cautious about investing in China amid geopolitical tensions surrounding Taiwan and regulatory concerns regarding ownership of Chinese assets.
