Hundreds of Billions of Middle Eastern Capital Pouring Into Hong Kong? Industry Insiders Say Data Hard to Verify, But Inflow Trend Does Exist

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Reporter Zhuo Yong and Wang Jun, Securities Times

Recently, rumors of “HKD 300 billion in Middle Eastern capital flooding into Hong Kong” have been circulating widely in the market. The Securities Times reporters recently visited several banks, brokerages, financial institutions in Hong Kong, and Middle Eastern market researchers, learning that after the turmoil in the Middle East, there has indeed been an increase in foreign capital inflows into the Hong Kong market, including funds from the Middle East. However, the exact scale of inflows and the true flow directions are difficult to precisely track and verify.

What is clear is that, on one hand, the impact of Middle Eastern instability has heightened global risk aversion; on the other hand, Middle Eastern capital has been steadily deploying in Hong Kong and mainland China markets over the past two years. Hong Kong has become an important destination for global funds, including Middle Eastern capital.

The trend of Middle Eastern capital inflow exists

The most concerned issue in the market now is the rumor of “HKD 300 billion Middle Eastern capital flowing into Hong Kong.”

Looking at the trading volume of the Hong Kong stock market, according to China Galaxy Securities, in the week following the outbreak of the US-Iran war (February 28), the average daily turnover on the Hong Kong Stock Exchange was about HKD 341.5 billion, an increase of approximately HKD 99.7 billion compared to the week before the conflict. Even considering the disruptions caused by the Spring Festival, this still marked the highest weekly trading volume in nearly half a year.

Some Hong Kong stock observers pointed out that part of this incremental capital came from the Middle East. However, an analyst from a foreign bank in Hong Kong told reporters, “It’s difficult to determine in the short term whether there has been a large influx of Middle Eastern funds due to the war. They are more likely to be involved through ETFs or large public funds, and it may take some time to see clear signs.”

Zhu Zhaoyi, Executive Director of the Middle East Research Institute at Peking University HSBC Business School, also stated directly that there are no signs indicating that such a large amount of HKD 300 billion has entered the Hong Kong capital market. “This number is somewhat exaggerated. The war has only lasted a little over ten days, and mature institutions are unlikely to have heavily allocated in such a short period.”

However, the reporter also learned from some brokerages, banks, and financial institutions in Hong Kong that the trend of Middle Eastern capital inflow does exist. “Recently, Middle Eastern funds, especially Asian funds originally invested in the Middle East, have shown increased interest in Hong Kong. But how this will develop still needs observation and ongoing tracking,” said Yuan Mei, Director of Investment Research at Sullivan Jieli (Shenzhen) Cloud Technology Co., Ltd.

Some banks have also detected obvious capital movements. “In March, the capital inflow increased significantly, especially in the first week after the war broke out, with single transactions often exceeding HKD 1 million. But currently, it is still impossible to identify the specific sources of the funds,” said a person in charge of a Hong Kong commercial bank with Chinese background, speaking to Securities Times.

This person also revealed that from a frontline banking perspective, even if there is capital returning from the Middle East, it mainly consists of Chinese and Chinese-descended funds that previously transited through Hong Kong; family offices or sovereign funds with purely Middle Eastern backgrounds usually choose to establish local offices in Hong Kong for allocation.

Wen Tianna, CEO of Boda Capital International, said, “Recently, inquiries from Middle Eastern clients about Hong Kong stock investments, bond allocations, and setting up family offices in Hong Kong have surged by over 50% month-on-month. Some investors who moved to Singapore and Dubai in earlier years are now considering bringing their assets back to Hong Kong.”

A family office manager in Hong Kong also confirmed that recent consultation volumes have increased significantly. “Mainly clients who originally set up companies in the Middle East are planning to relocate their headquarters and expatriate staff due to the war. One day, we had 10 client meetings to discuss response plans—much busier than before.”

However, Zhu Zhaoyi pointed out that the war has already caused capital outflows locally. If the conflict prolongs, sovereign funds and “national team” capital from the Middle East might instead “return home” from other regions to prioritize liquidity in their domestic markets. “It’s too early to draw conclusions now, but the long-term trend of allocating eastward won’t change.”

Proactive deployment in Hong Kong stocks

In fact, looking at the longer-term picture, Middle Eastern capital has been actively deploying in Hong Kong markets over the past two years.

According to Zhu Zhaoyi, the proportion of Middle Eastern sovereign funds participating in Hong Kong IPO cornerstone subscriptions has increased from less than 20% at the beginning of 2024 to around 38-39% by early 2026, with a cumulative scale of about HKD 6-7 billion. “They mainly build positions cautiously, and most of their deployment was initiated before the outbreak of the war. This is a long-term strategic allocation, not a temporary risk-avoidance move.”

Data from Wind shows that since 2026, 28 new stocks have been listed in Hong Kong, attracting about 230 cornerstone institutions, with Middle Eastern capital frequently appearing. For example, among the cornerstone investors in the Hong Kong IPO of Dongpeng Beverage, Al-Rayyan Holding LLC is an indirect wholly owned platform of the Qatar Investment Authority; MiniMax listed on January 9, attracting 14 cornerstone institutions with a total investment of about USD 350 million, including the Abu Dhabi Investment Authority subscribing at HKD 165 per share for 3.065 million shares; Jingfeng Medical listed on January 8, also with 14 cornerstone institutions, with the Abu Dhabi Investment Authority subscribing at HKD 43.24 per share for 2.699 million shares.

It is noteworthy that Middle Eastern capital’s interest is not limited to the Hong Kong market; they also show high attention to the A-share market.

In recent years, Middle Eastern sovereign wealth funds such as the Abu Dhabi Investment Authority and Kuwait Investment Authority have continued to appear in the list of institutional investors in A-shares through channels like QFII.

Wind data shows that by the end of Q3 last year, the Abu Dhabi Investment Authority was among the top ten shareholders in 24 A-shares, with a holding market value of HKD 4.214 billion. The largest holdings were in Hengli Hydraulic, valued at about HKD 1.138 billion; Baofeng Energy, close to HKD 800 million; and several other stocks like Nanjing New Materials, Yangnong Chemical, and Hegang Resources, each with holdings exceeding HKD 100 million.

Kuwait Investment Authority was also among the top ten shareholders in 14 A-shares at the end of Q3 last year, with a total holding value of HKD 3.485 billion. Stocks like Hengli Hydraulic and Oriental Yuhong each had holdings over HKD 500 million.

Wen Tianna pointed out that, overall, Middle Eastern capital focuses on three types of assets: first, high-dividend blue chips such as banks, energy, and utilities; second, core technology assets like Tencent, Alibaba, Xiaomi, and Meituan; third, cornerstone investors in new economy IPOs. Their allocation logic emphasizes long-term cash flow, growth dividends, and valuation recovery, favoring stability and high certainty.

Hong Kong Fully Embraces the Safe-Haven Demand

When conflict erupts, capital flees first. Dubai was once considered a safe haven for Middle Eastern capital, but now its sense of security has diminished. Why has Hong Kong become an important destination? The primary driver is the pursuit of safety and risk aversion.

The war’s short-term impact on the capital markets of Gulf countries mainly manifests in sentiment, such as stock and bond market volatility. However, these emotions usually subside as the situation clarifies. The more critical long-term impacts are twofold: first, the asset pricing in Gulf countries will be affected long-term by geopolitical risks; second, foreign investment will undergo structural adjustments. Some long-term institutional funds with low risk tolerance, such as pension funds and insurance funds, may systematically reduce their allocations to the region. Once such adjustments occur, they are difficult to reverse in the short term.

“Dubai was an option before, but now one less choice,” said a Hong Kong-based bank executive with Chinese background. “Global capital, beyond London and New York, is starting to consider Hong Kong more seriously.” Chinese capital feels this especially strongly: “Since the Silicon Valley Bank incident, many entrepreneurs have become more cautious about overseas assets, and Hong Kong’s rule of law and stability have become key advantages.”

Hong Kong is also preparing to meet this wave of risk-averse demand. Hong Kong Financial Secretary Paul Chan mentioned that if the Middle East situation remains unstable, it will impact the real economy and other sectors. In the medium to long term, the current situation highlights Hong Kong’s role as a “safe harbor,” and the foresight and stability of policy-making are advantages in times of upheaval.

Moreover, the investment value of Hong Kong stocks remains an important factor for long-term Middle Eastern capital deployment. Since October last year, the Hang Seng Tech Index has been declining, though it has recently rebounded in the past two weeks, still considered a “valuation bargain.”

The deeper logic behind Middle Eastern capital’s deployment in Hong Kong and mainland China markets is strategic alignment. Zhu Zhaoyi pointed out that Gulf countries are actively “decarbonizing,” focusing on AI, smart technology, data, and advanced manufacturing. Hong Kong continues to gather assets in these smart economy sectors. “The frontier industries in mainland China align highly with the transformation goals of Arab countries, which naturally enhances their attractiveness.”

It is also noteworthy that foreign capital represented by Middle Eastern funds continues to deploy, potentially leading to a revaluation of core assets in Hong Kong stocks. Yuan Mei cited CATL as an example, noting that its H-share price currently trades at about a 40% premium over its A-shares, reflecting strong foreign investor interest and a new wave of value reassessment of China’s core assets.

Wen Tianna believes this is not just a simple capital migration but a sign of the reshaping of the global capital landscape: under geopolitical turmoil, funds are shifting from high-risk areas to markets with “safety + value-added” attributes. The undervalued Hong Kong market is being rediscovered, possibly initiating a long-term revaluation cycle.

(Edited by: Wang Zhiqiang HF013)

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