Sovereign Investors Flock to China Amid Diversification Push
China’s appeal to sovereign investors has surged, with a 21% year-on-year increase in inflows in 2024, according to a global tracker of nearly 750 state-owned investors. The country attracted $10.3 billion in investments from central banks, sovereign wealth funds, and public pension funds, up from $8.5 billion in 2023.
Middle East Ties and Diversification Drive Growth
The growth in investments can be attributed to warming ties between China and the Middle East, as well as increased diversification goals among investors. “China is becoming increasingly important for sovereign investors seeking to diversify their portfolios away from developed markets,” notes Diego Lopez, founder and managing director of Global SWF.
Regional Breakdown: Gulf Nations Lead the Way
Sixty-two percent of sovereign wealth fund investments in China last year came from Persian Gulf nations, including Saudi Arabia’s Public Investment Fund (PIF), Abu Dhabi’s Mubadala, and the Qatar Investment Authority (QIA). Singapore accounted for 24% of investments, including from Temasek and GIC.
Sector Focus: Real Estate, Financial Services, and Tech
Investors were drawn to China’s real estate, financial services, and technology sectors, among others. Notable deals include GIC’s acquisition of additional shares in a China Vanke shopping center in Shanghai, and ADIA and Mubadala’s investments in Zhuhai Wanda’s shopping malls.
Asia-Pacific Region Attracts Sustained Investment
Sovereign wealth funds are increasingly looking to Asia for growth potential and diversification. With India emerging as the fastest-growing economy in 2024, alongside strong growth in China, Indonesia, and the Philippines, the Asia-Pacific region is set to attract sustained investment.
Global Economic Outlook: Asia-Pacific Leads the Way
The Asia-Pacific region is expected to contribute roughly 60% of global economic growth in 2024, according to the International Monetary Fund. India and China are projected to deliver 7% and 4.8% growth in gross domestic product in 2024, respectively.
Developed Markets Remain Top Choice
Despite the growing appeal of emerging markets, developed markets remained the top choice for most sovereign investors in 2024. The US was the top destination, with $72.6 billion in investments, followed by the UK, which saw a 65% increase to $26 billion.
Mubadala Leads the Pack
Mubadala was the biggest spender among sovereign investors in 2024, deploying $29.2 billion in 52 deals across various sectors, including private credit, artificial intelligence, and semiconductors.
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