Although the performance of Hong Kong stocks in 2023 was weak, the “Middle East investment boom” that emerged this year continued to attract market attention.

According to incomplete statistics as of December 25, six companies in the Hong Kong stock market have publicly announced that they have won the favor of Middle Eastern investment institutions since this year. News of investment and cooperation continues, including individual stocks related to tourism, new energy vehicles, software, satellites, and aquaculture. The current scale of cooperation and investment has reached HK$66.632 billion.

First, on the tourism side,$COSMOPOL INT'L (00120.HK)$,$HAICHANG HLDG (02255.HK)$It is favored by local tycoons in the Middle East.

Saudi Arabian Ministry of Investment (MISA),$REGAL INT'L (00078.HK)$Sihai International announced on December 22 that it has signed a Memorandum of Understanding and has become a strategic partner to jointly cooperate in hotel development and management projects. The purpose is to acquire, develop and manage a series of sustainable hotels, serviced apartments and innovation centers under the “Fuhui” brand under Regal Hotels. According to preliminary estimates, the investment scale of this cooperation is about 5 billion US dollars.

Haichang Ocean Park announced on December 15 that the company recently signed a non-legally binding memorandum of cooperation with the Saudi Tourism Development Fund and plans to cooperate in developing Haichang Marine Park in the Kingdom of Saudi Arabia in accordance with Saudi tourism strategy.

As for this move, it may be related to Saudi Arabia's “Vision 2023.” According to public information, Saudi Arabia's “Vision 2030” is a long-term development plan that aims to transform Saudi Arabia into a global investment center, a link hub for the three continents of Asia, Europe, and Africa, and the heart of the Arab and Muslim world. The core of the plan is to diversify the economy to reduce dependence on oil revenues.

According to a report by China News Network, Saudi Arabia's Deputy Investment Minister Saleh Al-Khabti (Saleh Al-Khabti) said, “As Saudi Arabia moves towards 'Vision 2030', tourism is a key investment area. In 2022, Saudi Arabia welcomed more than 18 million inbound tourists, surpassing other Arab countries, and is expected to maintain an annual growth rate of about 11% over the next 10 years.

In terms of new energy vehicles,$NIO-SW (09866.HK)$It has received investment from Abu Dhabi investment agency CYVN Holdings twice this year.

On June 20, 2023, NIO announced the signing of a share subscription agreement with Abu Dhabi investment agency CYVN Holdings. According to the agreement, CYVN Holdings will make a total strategic investment of about 1.1 billion US dollars in NIO through targeted issuance of new shares and transfers of old shares.

NIO then received another investment from CYVN Holdings on December 18. According to the share subscription agreement, CYVN will invest a total of US$2.2 billion in cash to subscribe for 294 million shares of the company's newly issued Class A common stock at a purchase price of US$750 per share.

It is worth noting that CYVN Holdings' investment will undoubtedly inject confidence into NIO's development. Furthermore, the agency will help it develop international business. According to the June announcement, NIO and investors have reached a cooperation and will jointly seek opportunities for NIO to develop international business after the investment transaction ends.

Middle Eastern Capital has also extended its reach to individual stocks related to software and aquaculture.

According to the December 10 announcement, Al-Rayyan Holding LLC, a subsidiary of Qatar's sovereign wealth fund Qatar Investment Authority, subscribed$KINGDEE INT'L (00268.HK)$155 million new shares accounted for about 4.26% of the expanded share capital. The current subscription price is HK$10.1, a discount of about 2.7% from last Friday's closing price of HK$10.38; the amount raised was HK$1,562 million.

On August 28,$FENGXIANG CO (09977.HK)$With the investment of Middle East Capital, the Abu Dhabi Investment Authority will indirectly hold about 9.9% of Fengxiang's shares. According to the announcement at the time, the company signed an agreement with the subscriber Platinum Peony B 2023 RSC Limited (which is wholly owned indirectly by the Abu Dhabi Investment Authority) to conditionally agree to the allocation and issuance of shares, which will be subscribed by Subscriber A and Subscriber B, at a subscription price of HK$1.5132 per H share. Based on the highest number of shares subscribed, the highest net proceeds are expected to total approximately HK$270 million.

Why are there many intersections between the Middle East market and the Hong Kong stock market?

The Hong Kong Chief Executive's trip to the Middle East in February of this year has contributed to the continued heating up of economic interaction between the two places since this year. During this visit, the Hong Kong Stock Exchange and the Saudi Stock Exchange signed a cooperation agreement involving the two sides to explore cooperation in the fields of fintech, ESG, and mutual listing in the future.

Subsequently, on September 28, the Hong Kong Stock Exchange announced that the Saudi Stock Exchange had been added to its list of approved stock exchanges. From now on, companies listed on the main board market of the Saudi Stock Exchange can apply for a second listing in Hong Kong.

Wu Jiexuan, head of listing at the Hong Kong Stock Exchange, once said: We are pleased to include the main board market of the Saudi Arabian Stock Exchange in the list of approved stock exchanges. The Saudi Stock Exchange is a mature stock market that is a capital hub for many different types of companies in Saudi Arabia and the entire Middle East region, mainly in the energy, industrial, and medical industries. HKEx has always strived to enhance the attractiveness and competitiveness of the listing system and attract high-quality companies from all over the world to go public in Hong Kong.

He pointed out that this move hopes to provide more leading international companies with channels for listing in Hong Kong, so that they can access local and international investors through diversified markets and obtain the capital needed to drive business growth, while also creating more opportunities for investors.

In October, as Jitoku was celebrating the company's imminent listing in Hong Kong, Saudi Stock Exchange CEO MOHAMMED Al Rumaih said that Saudi Arabia welcomes high-quality Chinese industrial companies to go public in Saudi Arabia for the second time.

Middle Eastern capital investment in Chinese assets will increase tenfold

Regarding Middle East Capital's move, Ethan Chan, chairman of Hong Kong asset management company ARTE Capital Group, said in an interview with the media earlier that a sovereign wealth fund they are cooperating with currently invests about 7% of its entire investment portfolio in Chinese assets, which is one-fifth of its investment in the US.

“However, the fund is also willing to double its investment in China and go even further.”

Meanwhile, the CEO of the Hong Kong Stock Exchange, the European Union, also stated earlier that large sovereign wealth funds in the Middle East currently only invest 1% to 2% of their assets in China, and he believes this figure will increase tenfold.

CITIC Securities also analyzed in its August research report that as the industrial upgrading strategies of major Middle Eastern economies advance, it is expected that in the future, the layout of China's dominant industries, such as new energy and advanced manufacturing, will be increased in line with their own development strategies.

According to estimates by CITIC Securities, the “oil yuan” brought about by diplomatic breakdowns and monetary cooperation is expected to gradually flow back into the Chinese capital market, or may gradually bring capital in the amount of about 20 billion yuan per year to A-shares and H-shares, and is expected to gradually expand in the future.

edit/new