Sovereign wealth funds are pouring billions of dollars back into mainland China and Hong Kong, reversing a sharp investment slump, with Middle Eastern investors leading the charge.
Investments into mainland China and Hong Kong surged to $14.2 billion in the first nine months of 2026, surging 190% compared with the funds’ investments through the entire 2025, according to data provided to CNBC by Singapore-based consultancy Global SWF.
That’s in stark contrast to a 54% plunge in 2025 from the prior year as geopolitical tensions and concerns over China’s economic outlook weighed on investor sentiment.
The resurgence this year has been driven largely by Middle Eastern sovereign investors, with Saudi Arabia’s Public Investment Fund alone accounting for $6 billion of the inflows, followed by Abu Dhabi Investment Authority’s $2.5 billion, data from Global SWF showed.
Abu Dhabi’s Mubadala and Qatar Investment Authority have invested $800 million and $600 million, respectively.
Together, the four Gulf funds accounted for nearly 70% of sovereign investments into China and Hong Kong during the period, underscoring the growing role of Middle Eastern capital in the region.
Renewed interest in China comes as sovereign investors increasingly look beyond geopolitical tensions to capitalize on opportunities in Chinese technology, biotechnology, consumer businesses and advanced manufacturing.
“I think China has gone from ‘China is not investable’ to ‘is China investable?’ to today, the most common question I get is: ‘are we missing out?'” said Jenny Lee, senior managing partner at investment management firm Granite Asia.
Lee said China’s established strengths in manufacturing and biotechnology could give it an advantage as AI development increasingly expands beyond frontier models into industry-specific applications, including robotics and drug discovery.
China’s extensive network of factories and research laboratories provides access to real-world data that could become increasingly valuable in developing these applications, she added.
Drawing interest
For Abu Dhabi’s Mubadala, Asia in general has become an increasingly important destination as the sovereign investor seeks to diversify its portfolio and deepen exposure to long-term growth opportunities.
Andrew Wang, who leads consumer division for private equity at Mubadala, said the firm sees compelling opportunities in China, citing attractive valuations and the country’s vast consumer market as the fund continues to expand its presence in Asia.
“Valuations are lower than they’ve been in years. I think this will be a really good vintage for investors in China,” Wang told CNBC. He said China was the fund’s top priority for consumer investments in Asia, pointing to the potential for household consumption to expand and the growing competitiveness of Chinese brands.
Chinese companies were increasingly moving beyond their reputation for producing inexpensive goods toward higher-value products, Wang said, as…
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