Home / Press & Links /
Trillions of Middle Eastern capital swarming China, a big change brings to the industry
Midle Eastern capital, which made its fortune on oil, also has deep concerns. How to invest in new technologies to hedge risks and realize industrial transformation and economic diversification is a pressing issue for many Middle Eastern countries.
The banking capital of Israel and the sovereign wealth funds of the Middle East, whose main source is "petrodollars", are known as the two most powerful and mysterious forces in the global financial capital industry.
Israel through the banking industry, control half of the global financial sector, the Jewish Rothschild family shares in the central banks of many countries, in many international financial capital can be seen in its figure.
The sovereign wealth funds of Arab countries have also penetrated various industries in Europe, America and Japan through various equity participation and investment. For example, many daily consumption and luxury brands in Europe and the United States, the major shareholders behind the Middle East capital, including investment in Alibaba's Japan Softbank, the main shareholders are Middle East capital.
These two major financial capital forces, although both from the Middle East, but incompatible. Every time a conflict breaks out in the Middle East, the fight is actually a contest between these two forces.
For the Middle East sovereign wealth fund, we are no strangers, they have come to China for more than a decade. As early as 2006, the Kuwait Investment Authority and the Qatar Investment Authority subscribed 720 million U.S. dollars and 206 million U.S. dollars in shares to participate in the IPO of the Industrial and Commercial Bank of China, and later through the form of QFII (Qualified Foreign Institutional Investor), to the Chinese capital market sweeping goods.
After more than a decade of dealings, Middle Eastern capital has become increasingly interested in China. Especially with the recent gradual withdrawal of U.S. capital, Middle Eastern capital has increased its investment layout in China and expanded its investment volume. The investment style has also gradually changed, from the previous monopoly fields of banking, insurance and telecommunication, to the Internet, e-commerce and new consumption fields, and now it has switched to automobile, new energy, high-end manufacturing and biomedical industries.
Especially in these two years, the investment interaction between China and the Middle East has become increasingly close, and Middle Eastern capitals are no longer satisfied with the stock increase in the secondary market, but have begun to look for industrial investment and more visionary industrial layout, enjoying the growth dividends of China's advantageous race track, while also introducing Chinese technology and industrial chain, as a way to promote the transformation of the industrial structure of their own countries and diversification of the economy.
Many Middle Eastern countries, by selling oil accumulated a lot of dollars, in order to long-term development and value preservation and appreciation, they use this money to set up all kinds of investment funds, in which the sovereign wealth fund set up in the name of the state or the royal family has the greatest impact.
Preqin, an alternative asset research institute, shows that by 2022, the total asset management scale of Middle East sovereign wealth funds will be as high as 3.64 trillion U.S. dollars, accounting for 1/3 of the total amount of global sovereign wealth funds. 4 of the world's top 10 sovereign wealth funds are located in the Middle East, including the Abu Dhabi Investment Authority (ADIA) of the UAE, the Saudi Public Investment Fund (PIF), the Kuwaiti Abu Dhabi Investment Authority (ADIA) in the UAE, Saudi Arabia's Public Investment Fund (PIF), Kuwait Investment Authority (KIA) and Qatar Investment Authority (QIA).
With the exit of the dollar fund, these "no lack of money " Middle East investors accelerated the trend of "sweeping" to China. China's electric vehicles, photovoltaic as the representative of the new energy, the Internet, petrochemicals, biomedicine, high-end equipment manufacturing and many other fields, one after another, the Middle East sovereign fund's figure.
Abu Dhabi Investment Authority, Kuwait Investment Authority as the representative of the Middle East countries sovereign wealth fund, this year, also frequently into the ranks of A-share shareholders. According to incomplete statistics, the two institutions as of mid-year, has appeared in 62 A-share listed companies in the top ten outstanding shareholders.
Especially in the field of new energy vehicles, the Middle East capital has set off a wave of investment in China. From Gaohe to Azure, from small Peng to Evergrande Automobile, the new energy automobile industry, which has been seriously involution in China, has attracted attention from the Middle East.
In June this year alone, Gaohe Automobile's parent company, Chinese Yuntong, Great Wall Huaguan, the parent company of Future Automobile, and Azure Automobile, have announced that they have received investment from the Middle East or signed a strategic cooperation agreement, and the scale of the cooperation project is close to 50 billion yuan.
In October, the consortium from the United Arab Emirates Ben Aumir also announced that in the field of new energy vehicles and Chinese enterprises have joined hands.
On October 11, Xiling Power announcement announced that the company and Ben Aumir signed a "strategic cooperation framework memorandum", plans to set up a joint venture to invest 700 million yuan for the development of new energy auto parts - lightweight sub-frame and high-efficiency electric scroll compressor.
According to the Memorandum of Cooperation, Xilin Power and Ben Omier will jointly fund the establishment of a new platform company, including the establishment of a new energy auto parts joint venture company SPV1 in China, and the establishment of a new energy auto parts joint venture company SPV2 in the Middle East.
October 9, Ben O'Mear also signed a cooperation agreement with BAIC Blue Valley, the two sides plan to join forces to develop the United Arab Emirates and Saudi Arabia two Middle East new energy vehicle market.
Of course, the Middle East capital in the heavy position in China is not just a new energy car track, the entire energy sector, especially new energy is also a large-scale layout.
For example, the Middle East energy giant Saudi Aramco has extensive cooperation with China's traditional energy sector. The biggest impact is that in March this year, Saudi Aramco bought 10% of the shares of Rongsheng Petrochemical with 24.6 billion yuan, and the two sides cooperated on crude oil procurement, raw material supply, chemical sales, refined chemical product sales, crude oil storage and technology sharing
In May, Baosteel signed a contract with Saudi Aramco and the Saudi Public Investment Fund to build the world's first green and low-carbon full-process thick plate plant in Saudi Arabia. The three parties jointly invested in the establishment of the joint venture company, Baosteel shareholding of 50%, Saudi Aramco and PIF shareholding of 25%.
In recent years, Saudi Arabia also through the "industrial ace army" ACWA Power has been with the State Power Investment Corporation, China Electric Power Corporation, China Energy Construction, China Construction, Shanghai Electric, Vision Energy, Sunny Power, JinkoSolar, Huawei Digital Energy and many other Chinese new energy industry chain of each link of the leading enterprises, to establish strategic cooperation.
All in all, the Middle East capital to increase the position of China trend is obvious, for example, the Abu Dhabi Investment Authority's investment in the Chinese market from 4.5% at the end of 2019 to 22.9% in the first quarter of 2023.
The Saudi Public Investment Fund, for example, has invested a total of $12.2 billion in China from 2017-2021, accounting for 20% of its total overseas equity investments.
Hong Kong Stock Exchange chief executive Au Guan Sheng predicted that the investment capital of Middle East sovereign funds is expected to increase to $10 trillion by 2030, when more than 10-20%, or $1-2 trillion, will likely be invested in China.
In June this year alone, Gaohe Automobile's parent company, Chinese Yuntong, Great Wall Huaguan, the parent company of Prospect Automobile, and Azure Automobile, have announced that they have gotten the investment from the Middle East or signed the strategic cooperation agreement, and the scale of the cooperation project is close to 50 billion yuan.
In October, a consortium from the United Arab Emirates, Ben O'Mir, announced that it had joined hands with Chinese companies in the field of new energy vehicles.
The Middle Eastern countries, which have made their fortunes from oil, are rich, but there are deep concerns among the far-sighted royal families. The source of the economy is very single, overly dependent on oil and mineral resources.
Take Saudi Arabia as an example, the oil and petrochemical industry is the lifeblood of Saudi Arabia's economy, and in 2020, Saudi Arabia's oil revenue accounted for 87% of the country's fiscal revenue, accounting for 42% of the gross domestic product.
Especially in 2020, the Saudi economy suffered a huge impact due to the global epidemic and the fluctuation of international oil prices. Together with the rise of new energy sources such as wind and hydrogen, this has further deepened Saudi Arabia's determination to transform.
In order to get rid of its high dependence on the oil industry and promote its diversified development strategy, Saudi Arabia has begun to recognize the importance of the development of the clean energy industry, and launched the "2030 Vision" and "2020 National Transformation Plan" in 2016; in 2021, Saudi Arabia proposed to In 2021, Saudi Arabia proposed to achieve net-zero carbon emissions by 2060.
Like Saudi Arabia, the UAE has vowed to move away from oil dependence. The UAE plans to triple its renewable energy supply over the next seven
First, what to do when the new energy revolution and green industrial revolution come? It has to invest in new technologies to hedge its risks and realize industrial transformation;
Second, oil and other mineral resources are not endless, there will always be a day of depletion, the future of digging out how to do? So the layout of the future, diversified investment, diversification;
Third, the previous Middle East capital in Europe and the United States investment occupies an important position, with the decline of investment potential in Western countries, competition intensified, put the eggs in one place there are too many risks, should we change the place?
The thinking and answers to these questions all have only one answer, which is China.
China's emerging industries represented by new energy vehicles, new energy, artificial intelligence, and biopharmaceuticals are booming and in the midst of a growth dividend. Leading companies within these quality tracks have gone public, bringing huge capital gains to investors.
By investing in these emerging companies and popular tracks, Middle Eastern capitals have not only gained lucrative investment returns, but more crucially, introduced industrial chains into their countries through investment and cooperation in order to transform the mode of economic development. Reduce dependence on oil.