As global economic patterns continue to shift, new alliances are forming across continents. Hong Kong, already celebrated as one of the world’s top three financial centers, is now strategically deepening its ties with the dynamic economies of the Middle East. Strengthened cooperation between Hong Kong and the Gulf Cooperation Council (GCC) nations, including the United Arab Emirates and Saudi Arabia, is setting the stage for an era of intensified financial, trade, and investment collaboration that promises benefits for both regions.
Hong Kong’s relationship with the Middle East has evolved steadily over the years, but recent initiatives signal a more ambitious vision for the future. Charles Ng, Associate Director-General of Investment Promotion at Invest Hong Kong (InvestHK), emphasizes that Hong Kong’s role as a gateway to Mainland China and the broader Asia-Pacific region is now central to the region’s diversification efforts. Speaking during his recent visit to the UAE and Saudi Arabia, Ng conveyed Hong Kong’s strong desire to enhance its regional presence through dedicated platforms like the Economic and Trade Office in Dubai.
Deepening Economic Ties: A Strategic Vision
Hong Kong’s strategy is not merely about increasing the volume of trade or investment transactions. It is about creating a deeper, more strategic partnership that fosters mutual growth. Charles Ng’s meetings with leading Middle Eastern businesses, family offices, and investors reflect the serious intent behind this initiative. Through these high-level discussions, Hong Kong is positioning itself as an essential partner for the Middle East’s global expansion plans.
Beyond the UAE and Saudi Arabia, Hong Kong is actively exploring opportunities to strengthen its presence in other GCC countries, including Qatar, Kuwait, Oman, and Bahrain. Egypt, as a key player in North Africa, is also part of Hong Kong’s broader engagement strategy. The city’s unmatched connectivity and reputation as a bridge between East and West make it an ideal partner for Middle Eastern economies keen to expand their reach into Asia.
Building Financial Bridges: Recognised Stock Exchange Expansion
Hong Kong’s financial ecosystem is evolving rapidly to facilitate greater cross-border investments. One of the notable milestones in this direction was the inclusion of Saudi Arabia’s Tadawul as a Recognised Stock Exchange (RSE) by the Hong Kong Exchanges and Clearing (HKEX) in 2023. This opened new avenues for Saudi companies seeking secondary listings in Hong Kong’s vibrant markets.
By July 2024, HKEX had further expanded its network by adding the Abu Dhabi Securities Exchange and the Dubai Financial Market as Recognised Stock Exchanges. These developments allow issuers from the Middle East to seek secondary listings in Hong Kong, boosting capital flows and fostering deeper financial integration.
Charles Ng confirmed that Hong Kong will continue to pursue collaborations with more Middle Eastern exchanges, supporting the region’s companies as they diversify globally. These moves not only strengthen Hong Kong’s position as a global financial hub but also provide Middle Eastern investors with robust access to Asian markets.
Islamic Finance and New Investment Products
Acknowledging the importance of Islamic finance in the Middle East, Hong Kong has made considerable efforts to accommodate and encourage this sector. The city has developed a supportive platform for sukuk issuance, ensuring that Islamic bonds receive the same treatment as conventional ones. This includes tax amendments and the successful launch of three government sukuk, demonstrating Hong Kong’s commitment to financial inclusivity.
Additionally, new financial products are being rolled out to channel investment flows between Hong Kong and the Middle East. The launch of Exchange-Traded Funds (ETFs) that track Saudi stocks and, conversely, Saudi-listed ETFs tracking Hong Kong equities, is a testament to the growing financial connectivity.
Further initiatives include cross-regional investment products and fintech collaborations aimed at making financial transactions between the two regions smoother and more robust. The agreement between the Hong Kong Monetary Authority and Saudi Arabia’s Public Investment Fund to establish a $1 billion investment fund focusing on renewable energy, manufacturing, and fintech is a landmark example of joint ventures that promise long-term benefits.
Hong Kong’s Wealth Management Advantage
Hong Kong’s excellence in wealth management is another compelling reason why Middle Eastern investors are increasingly looking eastward. Recently ranked third globally in the Global Financial Centres Index, Hong Kong leads the world in investment management, insurance, and finance.
The number of family offices in the city has surpassed 2,700, with half managing assets exceeding $50 million. With an asset management industry handling close to $4 trillion, Hong Kong is poised to become the world’s largest cross-border wealth management hub by 2027, overtaking even Switzerland.
Efforts are underway to further enhance tax concessions for funds and single-family offices, making Hong Kong even more attractive to wealthy investors from the Middle East. The city’s regulatory clarity, legal transparency, and dynamic financial ecosystem present an unparalleled environment for wealth preservation and growth.
A Gateway to China and Asia-Pacific
One of Hong Kong’s most significant advantages is its role as a gateway to China and the wider Asia-Pacific region. Operating under the ‘one country, two systems’ framework, Hong Kong offers free capital flow, a robust legal system, and internationally aligned regulations. About two-thirds of China’s direct investments, both inward and outward, flow through Hong Kong, making it an essential partner for any entity wishing to engage with Mainland China.
The Stock Connect programmes linking Hong Kong with Shanghai and Shenzhen have dramatically improved cross-border equity flows. Recent data shows that mainland Chinese capital now accounts for a significant share of Hong Kong’s market turnover, further solidifying its role as a super connector.
Moreover, the Wealth Management Connect initiative in the Greater Bay Area and the Bond Connect programme have boosted cross-border financial participation, enabling more seamless investments between Mainland China and the world through Hong Kong. As the largest offshore RMB hub, Hong Kong continues to dominate cross-border transactions in the Chinese currency.
Strategic Growth Opportunities Ahead
The convergence of Middle Eastern diversification strategies and Hong Kong’s financial prowess presents immense opportunities over the next five years. Sovereign wealth funds from the GCC are increasingly focusing on Asia, attracted by the region’s strong economic fundamentals and growth prospects.
Middle Eastern economies’ push towards diversification away from oil dependence aligns perfectly with Hong Kong’s strength in areas like fintech, logistics, innovation, and renewable energy. Sectors such as digital infrastructure, advanced manufacturing, and AI are becoming new frontiers for investment, with Hong Kong acting as the bridge.
The Belt and Road Initiative, where Hong Kong plays an active role, will further enhance infrastructure connectivity and investment opportunities between Asia and the Middle East. Strategic agreements, the establishment of new economic and trade offices, and collaborations on large infrastructure projects will fuel deeper integration between the two regions.
The Future of Hong Kong–Middle East Relations
Looking ahead, the partnership between Hong Kong and the Middle East is set to flourish. Financial ties will deepen, supported by a growing array of cross-border products and initiatives. Trade and investment flows will expand as businesses from the GCC set up operations in Hong Kong to tap into Asian opportunities.
Infrastructure and innovation projects will create new areas of collaboration, while strategic initiatives like the Belt and Road will strengthen economic bonds. Most importantly, the shared vision for economic diversification and innovation will keep Hong Kong and Middle Eastern economies closely aligned.
Hong Kong stands not just as a financial center, but as a strategic partner for the Middle East’s ambitions. As Charles Ng aptly described, amid a complex and uncertain global environment, Hong Kong’s enduring strengths — its connectivity, robust infrastructure, and open markets — position it as an indispensable partner for the Middle East’s next phase of growth.
