Hundred Billion Middle Eastern Capital Pouring into Hong Kong? Industry Says Data Is Hard to Verify, But Inflow Trend Definitely Exists

Securities Times Reporter Zhuo Yong and Wang Jun

Recently, reports of “HKD 300 billion 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 turbulence in the Middle East has heightened global risk aversion; on the other hand, Middle Eastern capital has been steadily expanding into 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.

Trend of Middle Eastern Capital Inflows Exists

The most pressing concern in the market right 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 Israel–U.S. war (February 28), the average daily turnover on the Hong Kong Stock Exchange was about HKD 3.4155 trillion, 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 increased capital came from the Middle East. However, an analyst at 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 plainly that there are currently 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 inflows does indeed 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 remains to be observed and continuously tracked,” said Yuan Mei, Director of Investment Research at Sullivan Jieli (Shenzhen) Cloud Technology Co., Ltd.

Some banks have also detected significant capital movements. “In March, the inflow of funds increased markedly, 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.

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 diaspora funds that previously transited through Hong Kong; pure Middle Eastern family offices or sovereign funds 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 establishing family offices in Hong Kong have surged by over 50% month-on-month. Some investors who moved to Singapore and Dubai earlier are now considering bringing their assets back to Hong Kong.”

A head of a Hong Kong family office also confirmed that there has been a noticeable increase in related inquiries recently. “Mainly clients who originally set up companies in the Middle East are planning to evacuate their headquarters and expatriate staff due to the war. One day, we received 10 groups of clients for meetings to discuss contingency plans—much busier than before.”

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

Proactive Positioning in the Hong Kong Stock Market

In fact, looking at the longer-term picture, Middle Eastern capital has been actively expanding into 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 total scale of about HKD 6–7 billion. “They mainly build positions cautiously, and most of their allocations started before the outbreak of the war. This is a long-term strategic deployment aimed at ‘looking east,’ not a temporary risk-avoidance move.”

The data shows that major Middle Eastern investors such as Abu Dhabi Investment Authority, Qatar Investment Authority, and Kuwait Investment Authority have all made key investments in Hong Kong stocks. Wind data indicates that since 2026, 28 new Hong Kong-listed companies have gone public, 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, with 14 cornerstone institutions investing a total of about USD 350 million, including 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 investors, with 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 Hong Kong stocks; they also show significant attention to the A-share market.

In recent years, sovereign wealth funds like Abu Dhabi Investment Authority and Kuwait Investment Authority have continued to appear among institutional investors in A-shares through channels like QFII.

Wind data shows that by the end of the third quarter last year, 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, nearly HKD 800 million; and 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 holding value of HKD 3.485 billion. Notably, Hengli Hydraulic and Oriental Yuhong each had holdings exceeding HKD 500 million.

Wen Tianna pointed out that overall, Middle Eastern capital tends to focus 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 tends to flee. Dubai, once considered a safe haven for Middle Eastern capital, has now seen its sense of security diminish. Why is Hong Kong becoming an important destination? The overriding driver is the demand for safety and risk aversion.

The war’s short-term impact on the Gulf countries’ capital markets 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 future asset pricing in Gulf countries will be affected 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 companies, may systematically reduce their allocations to the region. Once such adjustments occur, reversing them in the short term will be difficult.

“Dubai was an option, now it’s less so,” 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. Financial Secretary Paul Chan Mo-po 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 haven,” 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, it is still viewed as a “valuation bargain.”

The deeper logic behind Middle Eastern capital’s focus on Hong Kong and mainland China markets is strategic alignment. Zhu Zhaoyi pointed out that Gulf countries are actively pursuing “de-oilization,” investing heavily in AI, smart technology, data, and advanced manufacturing. Hong Kong continues to gather assets in these sectors. “The frontier industries in mainland China align closely with the transformation goals of Arab countries, making the region increasingly attractive.”

It is also noteworthy that foreign capital represented by Middle Eastern investors may drive 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 valuation reassessment of China’s core assets.

Wen Tianna believes this is not just a simple capital migration but a sign of a broader reshaping of the global capital landscape: amid geopolitical turbulence, funds are shifting from high-risk areas to markets characterized by “safety + value appreciation.” The undervalued status of Hong Kong stocks is being rediscovered, potentially initiating a long-term revaluation cycle.