The world’s factory is catching the interest of Middle Eastern sovereign wealth funds in a big way: Middle East sovereign wealth funds poured some USD 2.3 bn into Chinese companies in 2023, Bloomberg reports, citing Hong Kong Monetary Authority external executive director Kenneth Hui. To put this in context, the influx of funds represents a 2.2k% y-o-y increase from the USD 100 mn China received in 2022.

When one door closes, another opens: The surge in China-bound funds from our region of the globe comes as the world’s second most populous country found itself increasingly cut off from funds from Europe and the US that had historically been an important source of finance. The EU and US hiked tariffs on Chinese imports in recent years in a bid to contain the country’s rise in sectors that much of the developed world sees as a threat to their own economies.

But wealth funds in the region have signaled that they’re not immune from US pressure: Alat, the USD 100 bn AI and advanced technology investment firm created by Saudi Arabia’s Public Investment Fund, made clear that it would divest from Chinese tech if requested to by the US, EnterpriseAM Saudi reported in May. “So far the requests have been to keep manufacturing and supply chains completely separate, but if the partnerships with China would become a problem for the US, we will divest,” Alat CEO Amit Midha told Bloomberg at the time. US officials have also reportedly asked Saudi to “choose between Chinese and American technology” as they develop a semiconductor industry that forms the backbone of AI technology.

AND- The UAE’s G42 struck earlier this year a partnership with Microsoft after turning its back on Chinese tech under heavy pressure from Washington, as we have previously noted.

MARKETS THIS MORNING-

Major Asian benchmarks are mixed this morning after yesterday’s Nvidia-led tech selloff on Wall Street. US equities futures are flat, and while most major European benchmarks look set to dip at the opening bell.

EGX30

26,902

-0.6% (YTD: +8.1%)

USD (CBE)

Buy 48.27

Sell 48.37

USD (CIB)

Buy 48.27

Sell 48.37

Interest rates (CBE)

27.25% deposit

28.25% lending

Tadawul

11,697

-0.3% (YTD: -2.3%)

ADX

9,022

+0.1% (YTD: -5.8%)

DFM

4,000

-0.3% (YTD: -1.5%)

S&P 500

5,448

-0.3% (YTD: +14.2%)

FTSE 100

8,282

+0.5% (YTD: +7.1%)

Euro Stoxx 50

4,951

+0.9% (YTD: +9.5%)

Brent crude

USD 86.02

+0.9%

Natural gas (Nymex)

USD 2.82

+0.5%

Gold

USD 2,346.00

+0.6%

BTC

USD 59,504.00

-7.1% (YTD: +40.6%)

THE CLOSING BELL-

The EGX30 fell 0.6% at yesterday’s close on turnover of EGP 3.7 bn (16.6% below the 90-day average). Foreign investors were net sellers. The index is up 8.1% YTD.

In the green: GB Corp (+6.5%), Mopco (+3.4%), and Ibnsina Pharma (+3.3%).

In the red: Telecom Egypt (-6.6%), Orascom Construction (-2.5%), and Oriental Weavers (-2.0%).

CORPORATE ACTIONS-

E-finance is selling 10 mn treasury shares, the state-owned fintech giant said in an EGXdisclosure (pdf). The transaction is being carried out by Beltone Securities Brokerage.

Tags: