Sovereign funds from the Middle East have increased their investment in China. According to Q3 earnings, Abu Dhabi Investment Authority and Kuwait Investment Authority ranked in the top 10 stock holders among more than 50 A-shares companies.

The Abu Dhabi Finance Week 2025, which concluded on Thursday in the UAE's capital, gathered more than 40,000 attendees – including Bill Gates, Ray Dalio, and Stephen Schwarzman – and over 5,000 financial institutions such as commercial banks and sovereign funds.

"In selecting equity assets, Middle Eastern investors prefer those that possess a combination of growth potential, strategic synergy, and stable dividend capacity," said Zhang Yiming, managing director and global executive head of equities at China International Capital Corp. 

"Firstly, they are highly focused on high-end manufacturing enterprises related to green transition and industrial upgrading. Secondly, they also favor high-quality Chinese technology assets that possess global competitiveness. Simultaneously, they also prefer leading companies in traditional industries with stable cash flow and sound governance."

Analysts said diversifying investment is not the only reason why Middle East sovereign funds are putting their money in Chinese stocks. They are also expressing their confidence in the country's economy.

"This reflects how, in the process of China's own development, both the country's industrial chains and its science and technology are continuously advancing, and in some areas, are even relatively world-leading. The high-precision and cutting-edge technology of China's manufacturing sector, coupled with its relatively competitive costs, is also likely a very attractive factor for global investors," said Zongyuan Zoe Liu, Maurice R. Greenberg senior fellow at the Council on Foreign Relations.

Long-term patient capital from the Middle East is increasingly deepening its presence in the Chinese market, and its allocation ratio is expected to continue rising in the future, making it an important driving force for the internationalization of A-shares.

(Cover via VCG)