China and the Middle East are likely to expand two-way capital flows rapidly in the coming years as investment catches up with recent fast growth in trade, the chief executive of Abu Dhabi financial services firm Invest AD recently told a conference in Shanghai.
The next growth area will be two-way investment, with Abu Dhabi emerging as an entry point to the Middle East and North Africa (MENA), Nazem Al Kudsi said during a panel discussion at the Abu Dhabi and China Economic Forum.
“There are exciting opportunities for both sides,” he added. “And as China looks at MENA, Abu Dhabi is emerging as the easiest and most attractive route into the region. Whether you’re a Chinese oil entity, a construction entity, or a financial services entity, Abu Dhabi is creating the right financial, logistics and telecoms infrastructure.”
Two-way trade between China and the Middle East has tripled in the last five years to $107bn in 2009. Chinese companies have also become more active in the Middle East, especially in the infrastructure sector, winning $2.1bn worth of the construction deals in the United Arab Emirates alone in 2008.
The MENA region is expected to record 4.2 per cent growth in gross domestic product this year, while China is headed for 10 per cent growth, according to the International Monetary Fund.
But Al Kudsi noted that although the Gulf states and China had become major investors globally, two-way investment flows lagged far behind the growth in trade.
“A lot of people ask me, why Chinese investors should look at our region when their country is growing so quickly,” said Al Kudsi. “But as my grandfather and your grandfather could tell you, way before the advent of portfolio theory, you don’t put all your eggs in one basket.”
Invest AD and Hong Kong’s Quam Ltd recently announced a partnership to offer Asian investors the opportunity to use the Middle East to diversify their portfolios. Invest AD will act as sub-advisor, stock picking for Middle East-focused funds launched by Quam.
The one-day Abu Dhabi and China Economic Forum, was the first such conference to be organised by Abu Dhabi’s Department of Economic Development, Chinese bank ICBC and Institutional Investor.