Boao Observation | Signals of Middle Eastern funds entering Hong Kong are becoming clearer, and Zheng Yongnian says developing new industries is the key

Middle Eastern capital’s “advance eastward” into Asia, and gradually entering the Hong Kong market, has become a new trend.

Recently, talk about “Middle Eastern capital of HKD 300 billion pouring into Hong Kong” has been circulating in the market. First Financial daily has learned from multiple industry insiders that this figure has no clear substantiation, but the idea of Middle Eastern capital considering an entry into the Hong Kong market has become a new trend.

At the Boao Forum for Asia, Hong Kong Special Administrative Region Chief Executive John Lee pointed out that while some forces are busy drawing lines and engaging in confrontation, Hong Kong is working to open up a trade corridor. He also revealed recent progress in investment agreements with Qatar and Saudi Arabia.

Industry insiders believe that Hong Kong’s stability and certainty have become the key factors attracting Middle Eastern capital, but how to transform short-term “hot money” into long-term patient capital remains a challenge.

“Capital comes in search of profits; if there’s nothing to be gained, it will leave. This is a major challenge for Hong Kong.” Zheng Yongnian, Dean of the School of Public Policy at the Chinese University of Hong Kong (Shenzhen), former Dean of the Qianhai Institute of International Affairs, and Chairman of the Guangdong-Hong Kong-Macao Greater Bay Area Research Institute, said in a group media interview that the key is whether these foreign funds can be converted into risk capital and invested in China’s real economy.

Signs of Middle Eastern funds entering Hong Kong are becoming increasingly evident

The rumor that Middle Eastern funds are entering Hong Kong is being backed by a series of views at the level of the Hong Kong SAR government.

“Signing more free trade agreements is also a top priority. We are committed to joining the Regional Comprehensive Economic Partnership (RCEP), the world’s largest free trade agreement.” John Lee said.

In fact, John Lee has previously mentioned cooperation with Middle Eastern capital multiple times in public. On March 17, when attending a conference, he said that the situation in the Middle East further highlights Hong Kong’s advantages in security, stability, and development opportunities. If funds are looking for an exit, Hong Kong will engage more proactively with Middle Eastern investors.

In early March, Hong Kong SAR Financial Secretary Paul Chan disclosed that recently, a number of U.S. funds have flowed into Hong Kong, China. Regarding the possibility that Middle Eastern funds may choose Hong Kong because of “seeking a sense of security,” Hong Kong has also made sufficient contingency plans.

A series of recently disclosed data can also corroborate this. According to data recently released by the Hong Kong Securities and Futures Commission, in 2025, net capital inflow into funds established in Hong Kong was HKD 356.7 billion, up 118.5% year-on-year; as of the end of that year, the asset under management (AUM) of those funds surged 38.3% year-on-year to HKD 2.28 trillion.

Entering March, there were also signs that Hong Kong stock holdings by “international intermediaries” began to warm up. “International intermediaries” usually refers to foreign financial institutions holding Hong Kong stocks through the Hong Kong Central Clearing and Settlement System (CCASS). Wind data shows that as of March 10, based on the number of shares held by “international intermediaries” multiplied by the latest weekly average price, the market value of the Hong Kong stocks they hold increased by about HKD 4.4 billion month-on-month, with the most significant rebound in the market value of their holdings in Alibaba—W.

Also, according to media reports, Hong Kong’s Financial Secretary Bureau Deputy Secretary Chen Haolian disclosed in a recent meeting that because Hong Kong’s market is relatively stable and highly predictable, in the first two months alone this year, more than 20 family offices have used the InvestHK platform to set up in Hong Kong or expand their businesses.

Zheng Yongnian also pointed to this trend in a group media interview at the Boao Forum for Asia. He said that when capital seeks certainty and uncertainty is felt elsewhere, it will automatically flow to regions that are more certain. Hong Kong is just such a place. At the same time, Middle Eastern capital shows interest in the development prospects of Mainland China and views Hong Kong as a gateway to the Mainland.

More importantly, Hong Kong can meet the core needs of Middle Eastern funds—“not only to hedge risks, but also to increase value.” An industry insider told reporters that most Middle Eastern funds are sovereign wealth funds and family offices, while Hong Kong stocks offer a large number of high-yield assets with sound operations, stable dividend yields, and reasonable valuations, and that can provide continuous cash flow. That is a fairly good match.

Whether “hot money” can stay

The market is concerned that after short-term hot money enters Hong Kong, whether it can remain in China in the long run, and which sectors it will flow into.

Zheng Yongnian believes that if hot money cannot find a place to land, it will be highly unstable. Capital comes seeking profits; if there are no profits to be made, it will leave. This is a major challenge for Hong Kong. He pointed out that Hong Kong’s four major industries are all service industries, and the real economy is relatively weak. Therefore, developing new industries is key. Capital can truly stabilize only when it is implemented in the real economy.

Zheng Yongnian suggested that, around technology-intensive industries such as innovative drugs and artificial intelligence, Hong Kong should strengthen cooperation with the Mainland and accelerate the construction of the Northern Metropolis.

Zheng Yongnian further noted that Hong Kong’s financial hub should clearly define its own positioning. Due to limitations of the institutional framework and mechanisms, Mainland China finds it difficult to develop a risk-investment system similar to that of Wall Street or London, but Hong Kong can play this role. DJI from Shenzhen and early-stage Tencent both grew through risk investment in Hong Kong.

He emphasized that China currently does not lack capital; it has even entered a stage of capital surplus. What is truly lacking is patient capital and risk capital.

First Financial daily noticed that among Mainland China innovative companies going public in Hong Kong, Middle Eastern sovereign wealth funds have appeared frequently, actively locking in 6 to 12 months lock-up periods. For example, Xiyu Technology (Mini Max) listed on January 9, with the Abu Dhabi Investment Authority subscribing for 3.065 million shares at HKD 165 per share; Jingfeng Medical listed on January 8, also with participation from the Abu Dhabi Investment Authority and 14 other cornerstone institutions, with the Abu Dhabi Investment Authority subscribing for 2.699 million shares at HKD 43.24 per share.

However, in a recent research report, CICC pointed out that Middle Eastern funds’ current participation is still mainly strategic allocations in the primary market, such as cornerstone investments in an IPO (, and they have not yet formed a systematic transfer of funds.

In addition, Hong Kong’s “bridgehead” role is also drawing attention. John Lee revealed at the Boao Forum for Asia that Hong Kong will make good use of its network to create opportunities for investors. The Hong Kong SAR government has established a dedicated “Go Global” task force to support Mainland enterprises in expanding overseas businesses. Last week, under the “Go Global” framework, a cross-disciplinary professional services platform was launched, aiming to connect Mainland enterprises’ needs for expansion with the intentions of global buyers and investors, and Hong Kong’s world-class professional services.

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