The author, Chibo Tang, is a managing partner at Gobi Partners, a venture capital firm based in Hong Kong and Kuala Lumpur.
In recent years, both institutional investors as well as family offices and high-net-worth individuals from the Middle East and North Africa (MENA) region have been doubling down in Asia, filling gaps left as Western investors retreat from China, the continent’s largest economy.
Foreign direct investment into China fell 29% last year, but MENA sovereign funds remained active, investing more than $9.5 billion. Amidst these capital market shifts, one city is set to benefit significantly more than others: Hong Kong.
Why Hong Kong, one asks? The city is already widely renowned as one of the world’s leading financial hubs. Hong Kong originates and intermediates two-thirds of China’s inward FDI and outward direct investment, and has several important advantages over other Asian financial centres like Singapore.
Hong Kong’s unique position, as the only financial centre with deep ties to both China and ASEAN, make it the most logical destination for MENA capital seeking comprehensive exposure in the Asia Pacific region.
Hong Kong’s advantages
One of Hong Kong’s main differentiators from other Asian financial hubs is its close relationship with both Chinese and Southeast Asian businesses. In a September 2024 speech, Hong Kong Chief Executive John Lee said about 650 ASEAN companies have offices in the city, with 50 new ones established during the first seven months of that year alone, underscoring the close ties between the two regions.
The Hong Kong Stock Exchange is also the most popular overseas listing destination for ASEAN firms, further demonstrating its role as the preferred connector between China and other global markets.
The HKEX is the most popular overseas listing destination for ASEAN firms
Hong Kong’s interest and proactiveness in growing ties with the MENA region only strengthen the city’s attractiveness. Chief Executive Lee has personally led two delegation trips to the Middle East, each with a focus on fostering tech innovation and cross-border collaboration.
His most recent delegation in May included over 30 Hong Kong business leaders, along with more than 20 entrepreneurs from mainland China who visited Qatar and Kuwait. During the four-day visit, 59 Memoranda of Understanding and agreements were signed to build stronger collaborations with GCC countries.
Hong Kong’s other benefits include a transparent regulatory environment, few restrictions on foreign investment, a low corporate tax rate and policymakers who are familiar with Islamic finance.
Connecting MENA to Asia
This combination of market access and regulatory advantages is why MENA investors are becoming more interwoven into Hong Kong’s financial ecosystem. There are already 2,700 family offices in Hong Kong, but the government has set a goal of adding 200 by the end of this year. MENA family offices are a key part of that expansion plan as many diversify their US and Europe-centric portfolios by increasing exposure to Asia.
Building on this momentum, Hong Kong is also investing in infrastructure to strengthen its position as the center of a growing MENA-Asia investment corridor. This includes a subsidiary office opened by Saudi Arabia’s Public Investment Fund and InvestHK’s new Cairo office, both intended to strengthen economic ties and uncover investment opportunities.
This growing institutional presence is already generating concrete results. Capital and innovation is flowing between MENA and Hong Kong, benefitting tech ecosystems in both. Last year, Hong Kong Science and Technology Parks (HKSTP) signed an agreement with Saudi Arabia’s Beta Lab that enables HKSTP Park startups to tap into its USD $300 million fund.
Tapping into promising tech sectors
This deepening relationship is translating into sector-specific opportunities. Hong Kong gives MENA investors the opportunity to invest in many high-growth tech industries. When the PIF and Hong Kong Monetary Authority signed an MOU last year for a US$1 billion investment fund to support Hong Kong companies that want to expand into MENA, it targeted sectors like manufacturing, renewables, fintech, and healthcare.
Fintech is set to be a fundamental part of MENA-Hong Kong collaborations
In particular, fintech is set to be a fundamental part of MENA-Hong Kong collaborations. In the first quarter of 2025, fintech accounted for 57% of capital raised in MENA. Hong Kong already has a flourishing fintech industry, with a market size projected to reach $606 billion by 2032, setting the stage for significant partnership opportunities.
The momentum is already visible in cross-border expansion. Several fintechs have made inroads into MENA, including virtual insurer AIFT (formerly known as OneDegree), a Gobi portfolio company that has partnered with Dubai Insurance and plans to expand further in the region. Other Hong Kong fintech startups that have already launched in MENA include digital wealth management solutions provider Quantifeed and cross-border payments infrastructure startup XanPool.
Despite the worldwide slowdown in climate tech financing, Middle Eastern investors invested $3.6 billion into the sector globally in 2024.
Similarly promising is the convergence in climate tech. Despite the worldwide slowdown in climate tech financing, Middle Eastern investors still invested US$3.6 billion into the sector globally in 2024 as Saudi Arabia and other countries seek to cut their carbon emissions.
Investment opportunities in Hong Kong’s green tech ecosystem are growing thanks to initiatives like the government’s Green Tech Fund and InvestHK’s support for startups. These include passive radiative cooling paint startup i2Cool, which has already expanded to Middle Eastern markets, and AI-powered robotic boat company Clearbot.
What Hong Kong must do more of
MENA-based institutional investors are increasingly active in global markets, deploying substantial capital across asset classes in 2024. It’s fair to say that Hong Kong still has the opportunity to capture a greater share of that capital flow. To fully capitalise on this growing momentum, Hong Kong should continue to invest in building deeper relationships and partnerships with its MENA counterparts. This could potentially include more InvestHK offices in MENA and other strategic partnerships similar to that of PIF and the Hong Kong Monetary Authority.
Hong Kong already has important advantages compared to Singapore as the preferred linchpin for the MENA-Asia capital corridor, but it can hone its competitive edge by continuing to invest in its innovation and technology sectors, while promoting further cross-border initiatives for its homegrown startups to look into expansion in the MENA region.
Similarly, having strong Hong Kong representation in the MENA region can also educate MENA-based startups and companies about the role that Hong Kong could play in those startups’ aspirations in China via the Greater Bay Area, as well as into ASEAN and the rest of the Asia Pacific region. The benefits from these opportunities would actually then extend beyond Hong Kong itself, as the city’s relationships with other regional markets mean countries throughout Asia would also stand to gain from Hong Kong’s growing ties with MENA as well.
The current reallocation of capital on a global level isn’t just a temporary trend. It represents a fundamental shift in global finance. As Western investors continue to retreat from China for the foreseeable future, Hong Kong’s ability to bridge the significant wealth in MENA with opportunities in both China and ASEAN makes it one of the most important players in this new investment paradigm.
Hong Kong’s ability to respond to this shift will determine whether it becomes the centre of the new MENA-Asia financial corridor that is now taking shape.
