Hong Kong-based fund managers keen to tap Middle East investment opportunities need cultural insights into the region, panel says

Hong Kong’s strong capital markets are attractive for Middle Eastern companies seeking to raise funds, but investor education is required for a better understanding of the Gulf region’s cultural and religious traditions, according to a panel discussion held on Thursday.

At the same time, there are opportunities for Hong Kong and mainland Chinese companies that are already deriving revenues from Middle East and Asian countries, to invest in this region as they seek to diversify their economies, the panel said.

“For the domestic fund managers to get ready to tap the opportunities in the Middle East markets, they need to understand and appreciate the local culture and religion, which is very important as they are quite different from those in Hong Kong and China,” said Plato Yip, vice-chairman of Elion International Investment and a veteran private equity and green finance investor.

“The Middle East market is complicated,” Yip said. “Don’t expect things to happen as fast as they do in Hong Kong or China.”

Yip was speaking at a panel discussion at the two-day Belt and Road Summit, which marked the 10th anniversary of the Belt and Road Initiative, Beijing’s plan to link dozens of economies in Asia, Europe and Africa around a China-centred trade network.

Middle East markets offer a lot of investment opportunities, as these countries are diversifying their economies and want to develop green and sustainable infrastructure in their cities to save energy and cut carbon emissions, Yip said.

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Jerry Li, founder and managing partner of eWTP Arabia Capital, said Hong Kong can attract investments on behalf of Middle East companies leveraging its status as an international financial centre. His company is a venture capital firm based in Beijing and Riyadh, Saudi Arabia.

“Two months ago, we invited a minister of Saudi Arabia to come here, and he was deeply impressed by Hong Kong’s great entrepreneurship,” Li said in the same panel. “There is a very big potential in the Middle East markets.”

Swiss lender UBS’s head of China global markets Thomas Fang said the Belt and Road Initiative projects need funding, which also offers new opportunities for Hong Kong.

“There are exciting opportunities for listed companies here,” Fang said at the same panel. “There are Chinese and Hong Kong companies which are deriving revenue from Middle East and Asian countries. These opportunities would definitely benefit from the existing portfolio investment.”

Secretary for Financial Services and the Treasury Christopher Hui Ching-yu said Hong Kong is the world’s leading stock and bond market and can raise funds for Middle East and Belt and Road projects.

“As infrastructure development gains momentum within the Belt and Road regions, enterprises can turn to Hong Kong for capital raising and financing,” Hui said in a speech at the summit. “Hong Kong, renowned as Asia’s leading stock and bond market, offers a range of options, such as IPOs [initial public offerings], post listing offerings and bond issuances.”

Hui said Hong Kong is also the largest offshore yuan trading centre, supporting companies’ yuan currency funding needs.

Hong Kong Exchanges and Clearing CEO Nicolas Aguzin said the exchange’s reforms in April allowing pre-revenue special technology companies involved in artificial intelligence (AI) and other new technologies to list here, meet the fundraising needs of Middle East companies.

In addition, Beijing has allowed Hong Kong-listed international firms to be traded by mainland investors via the Stock Connect schemes since March.

“For the first time, international companies that choose Hong Kong as a listing venue will be able to tap mainland China’s domestic capital base – this is unique,” Aguzin said in a separate panel of the summit on Thursday.

“Hong Kong will be the only venue in the world which allows access not just to international capital but also to domestic capital from mainland China, where the savings rate is very significant.”