HKMA, PIF to anchor $1bn fund to help HK, GBA firms boost Mid-East presence

Hong Kong Monetary Authority (HKMA) signed a deal with Saudi Arabia’s Public Investment Fund (PIF) to work towards jointly anchoring a $1 billion investment fund in another sign of deepening financial relations between the Middle East and Hong Kong.

 

The investment fund will support companies seeking localisation in the Middle East markets.

 

An HKMA spokesperson told AsianInvestor that the investment fund will target Hong Kong companies and mainland companies based in the Greater Bay Area (GBA). 

 

OPENING UP

 

The fund will work as a 'stepping stone for such companies to go out and open their Middle Eastern markets,' Eddie Yue, HKMA's chief executive told reporters on November 4. 

 

It will enhance Hong Kong’s position as a connecting point between the Middle East and mainland China, said Yue.

 

The fund expects to provide a platform for companies to internationalise their businesses and offer access to attractive investment opportunities in Saudi Arabia, especially to those in manufacturing, renewables, fintech, and healthcare.

 

Such investments will also enable the creation of skilled jobs and local economic growth, HKMA said in a statement.

 

Yue said that HKMA is working closely with central banks in the Middle East to improve co-ordination between the banking systems in the two regions through optimising local financial infrastructure such as payment systems.

 

This will also bring more opportunities to promote the Hong Kong dollar and Chinese yuan's uses in cross-region payments.

 

DEEPENING TIES

 

The $1 billion fund is the latest development in a string of moves that have deepened the relationship between Middle East institutional investors and Asian investors.

 

An exchange-traded fund (ETF) tracking Saudi equities made its debut on the Hong Kong Stock Exchange last year, making it possible for investors to invest in Saudi Arabia.

 

PIF was an anchor investor in the ETF, which is managed by Hong Kong-based CSOP Asset Management.

 

Large institutions, state-owned and private, in Asia are looking at investment opportunities in the Middle East, and investors in that part of the world are also betting on Asia as they seek to diversify their holdings beyond petroleum revenues. PIF is a dominant Middle East investor that is active in Asia.

 

PIF has an office in Hong Kong and it has previously stated plans to open offices in Beijing and Shanghai, according to media reports.

 

It has a mandate is to drive the kingdom’s transformation from oil and promote the growth of the private sector, as mapped out in its Saudi Vision 2030. It has $925 billion in assets under management.

 

Significant investments are being made in tourism projects powered by renewable energy and infrastructure to drive energy transition.

 

Saudi Arabia has invested $1.2 trillion for future developments to reshape its economy, according to a AllianceBernstein report.