NINGBO MORE KASI TRADING CO.,LTD

The “local rich” in the Middle East frequently make purchases

Nio, a Chinese new-energy vehicle company, received another investment from a Middle Eastern sovereign fund this month.
Nio announced on the 18th that CYVN Holdings, a subsidiary of the ABU Dhabi Investment Authority, a sovereign fund of the United Arab Emirates, will invest $2.2 billion to subscribe to 294 million ordinary shares of NIO at a purchase price of $7.50 per share.

This is another bet on NIO after CYVN Holdings invested $1.1 billion in NIO in June.

On December 10, the QIA announced a $200 million purchase of a 4.26 percent stake in Kingdee International Software, a provider of enterprise management software and cloud services.

At present, European and American funds are less willing to invest in the Chinese market, but the Middle East sovereign funds have been in the opposite direction, and have made several attempts to deploy Chinese assets.

The value of mergers, acquisitions and investments into China by Gulf funds has climbed to $2.3bn this year, up from about $100m last year, according to Global SWF, a platform that tracks sovereign fund investments around the world.

Only 1 to 2 per cent of Middle Eastern sovereign funds’ investments are currently in Asia, mainly China, and there is significant potential to increase this proportion, said Chris Au, chief executive of HKEx Group. He predicted that Middle East sovereign fund investment capital would grow to $10tn by 2030, with 10 to 20 per cent of that invested in Chinese assets, “which is very large”.

Mubadala Investments, another UAE sovereign fund, announced the opening of an office in Beijing in September; The Saudi Public Investment Fund also announced earlier this month that it would open an office in China. In addition, the Kuwait Investment Authority and the Qatar Investment Authority are also particularly active in the Chinese market.

These sovereign funds, which manage considerable sums in the Middle East, not only set up offices in China to invest directly in Chinese companies, but also set up joint ventures with Chinese companies or become investors in Chinese venture capital funds and bet on Chinese technology companies.

From the perspective of investment industry, Middle East sovereign funds pay more attention to China’s new energy, biotechnology, artificial intelligence and new consumption, of which the new energy industry chain is the investment focus of Middle East funds.

In addition, the figure of Middle Eastern funds also appears in advanced manufacturing, consumption and other fields.

Middle Eastern funds that need to expand their investments and Chinese assets that need international capital support are two ways to go.

In addition to optimistic about the potential of Chinese enterprises, Middle Eastern countries also hope to help their countries change the single economic structure dependent on oil and gas through China’s advanced manufacturing, artificial intelligence and mandatory consumption layout, and upgrade and transform to new energy and smart cities.

This is why Middle Eastern funds often require Chinese companies to land in addition to their investment.

For Chinese entrepreneurs, enterprises and investment institutions, Middle Eastern capital is a new source of international capital when Europe and the United States shrink their investment in China.

The economic interaction comes at a time when China is trying to expand its political and diplomatic influence in the Arab world. There is a growing trend that political heat in China and the Middle East is translating into economic momentum, facilitating capital flows between the two sides.