Hong Kong: Financial Gateway for GCC Capital into Asia and China

As GCC country pivot toward Asia, Hong Kong is emerging as a strategic hub for investment and Islamic finance, leveraging its global financial stature and deepening ties with the GCC. Strengthened by mutual diversification goals, Hong Kong offers Gulf investors seamless access to China and the broader Asia-Pacific region.

As geopolitical realignments and economic diversification reshape global investment flows, Hong Kong is positioning itself as a vital bridge between Asia and the Gulf. With its strategic location, world-class financial infrastructure, and deepening ties to the Middle East, the city is actively expanding its regional footprint to attract and facilitate Gulf capital.

According to Charles Ng, Associate Director-General of Investment Promotion at Invest Hong Kong (InvestHK), Hong Kong—one of the world’s top three financial centers—is committed to strengthening economic engagement with key Gulf markets, particularly the UAE and Saudi Arabia. This includes expanding cooperation in finance, trade, and investment in the years ahead.

Building on robust trade and investment relations with the UAE and Saudi Arabia, Hong Kong is also seeking to broaden its reach across other economies in the Gulf Cooperation Council (GCC)—namely Qatar, Kuwait, Oman, and Bahrain—as well as Egypt in North Africa.

In line with its commitment to financial diversification, Hong Kong has established a supportive framework for Islamic finance. This includes issuing government sukuk, amending tax laws to ensure parity with conventional bonds, and fostering an inclusive environment for Islamic financial institutions and products.

Since 2014, Hong Kong has issued three sukuk under its Government Bond Programme (GBP)—in 2014, 2015, and 2017—totaling US$3 billion. Each sukuk featured different structures and tenors, aimed at showcasing the city’s strengths as an Islamic finance platform and attracting a broader base of issuers and investors. These issuances have successfully demonstrated that Hong Kong’s legal, regulatory, and taxation frameworks can readily accommodate various sukuk structures.

Beyond sovereign issuances, Hong Kong has introduced a wide array of Islamic financial products and services. These include the listing of global sukuk on the Hong Kong Exchanges and Clearing Limited (HKEX), Islamic funds, Shariah-compliant equity indices, and Islamic banking windows. Such initiatives help position Hong Kong as a competitive sukuk hub in the region, enhancing its attractiveness relative to other financial centers.

These efforts aim to position Hong Kong as a premier platform for Islamic finance, offering access to opportunities across Asia and Mainland China.

Middle East’s growing investment pivot toward Hong Kong

In recent years, Middle Eastern nations—particularly those within the GCC—have increasingly turned their attention to Asia, with Hong Kong emerging as a key destination for Gulf capital and strategic partnerships. This shift is driven by both geopolitical calculations and economic opportunity.

For decades, Gulf states primarily favored Western markets, channeling oil revenues into assets across North America and Europe. However, mounting political scrutiny—such as the UK blocking a UAE-backed media acquisition and EU concerns over Gulf investments in telecom—has prompted a reassessment of this traditional approach. Increasing geopolitical tensions, particularly with the US, have further accelerated Gulf sovereign wealth funds’’ efforts to diversify their portfolios beyond the West.

Asia now presents a compelling alternative. Sovereign funds such as Saudi Arabia’s Public Investment Fund (PIF), Abu Dhabi’s Mubadala Investment Company, and the Qatar Investment Authority have all ramped up engagement across the region. Between 2022 and 2024, PIF alone allocated US$6.6 billion into Asian markets—doubling investment levels from previous years. These moves are not just about financial returns but also strategic access to innovation ecosystems and technology transfer, vital for the Gulf’s domestic economic transformation agendas.

Hong Kong is uniquely positioned to benefit from this shift. The city’s robust capital markets, proximity to Mainland China, and openness to Islamic finance make it a natural partner for the GCC. Recent high-profile visits by Hong Kong officials to Saudi Arabia underscore this momentum, as does the launch of a US$1.2 billion Sharia-compliant ETF in Hong Kong—designed specifically to attract Islamic investors from the Gulf.

During the Asian Financial Forum in Hong Kong, Faris Algarni, Assistant Deputy Minister of Investment of Saudi Arabia reaffirmed that “under the national investment strategy, the Kingdom is poised to deepen its collaboration with Hong Kong”. Other Gulf officials echoed similar sentiments, highlighting Hong Kong’s role in facilitating capital raising for GCC countries as they fund infrastructure, AI, logistics, and other sectors central to economic diversification.

Beyond financial market access, Gulf investors are increasingly targeting Asian tech sectors. In China, for example, Gulf-backed investments have focused on high-growth industries like electric vehicles (EVs) and video gaming. An Abu Dhabi-linked firm recently invested US$2.2 billion into EV maker Nio. Lenovo, too, struck a US$2 billion deal with a PIF-backed entity, with incentives tied to establishing regional manufacturing operations.

These developments are unfolding amid shifting global alignments. The UAE’s membership in BRICS and Saudi Arabia’s growing interest in the bloc signal a multipolar investment strategy that includes deeper engagement with Asian powerhouses like China. While U.S. security alliances still exert influence—as seen in the G42 controversy that forced a pivot away from Chinese partnerships—the overall trend remains clear: Gulf investors are embracing Asia, and Hong Kong is emerging as one of their preferred gateways.

Trade and investment flows

As all GCC countries pursue economic diversification beyond hydrocarbons, Hong Kong has emerged as a strategic conduit for Gulf investors entering Asia-Pacific markets—particularly Mainland China and ASEAN.

According to a HSBC report published in December 2024, trade between Hong Kong and the GCC continues to grow, with total merchandise trade reaching HKD 169 billion (US$21.6 billion) in 2023. Acting as a key re-export hub, Hong Kong channeled US$324 million worth of GCC goods into Mainland China and facilitated US$11.3 billion in Chinese exports to the GCC. These flows accounted for 75 percent of Hong Kong’s total exports to the region and 10 percent of China’s total exports to the Gulf.

Hong Kong’s appeal lies in its business-friendly environment, low tax regime, rule of law, world-class infrastructure, and cutting-edge innovation. It offers a full suite of professional services—spanning finance, legal, logistics, and management—that GCC investors can leverage to enhance returns and support regional initiatives.

The Gulf’s national development strategies further align with Hong Kong’s strengths. The UAE’s “We the UAE 2031” vision focuses on building a cohesive society, a competitive economy, and a sustainable environment. Saudi Arabia’s phased Vision 2030 aims to diversify its economy, empower citizens, and attract international investment.

To deepen bilateral cooperation, Hong Kong signed an Investment Promotion and Protection Agreement (IPPA) with the UAE in 2019. Key GCC entities, such as Saudi Arabia’s PIF and Dubai Chambers, have also established offices in Hong Kong, further institutionalizing economic ties.

High-level exchanges continue to propel momentum. In April, Chief Executive John Lee met with GCC Secretary-General Jasem Mohamed Albudaiwi to explore further cooperation. In October, Financial Secretary Paul Chan led a delegation to Saudi Arabia for the Future Investment Initiative in Riyadh, where he reaffirmed Hong Kong’s commitment to promoting green finance and green technology.

During his visit, Chan emphasized Hong Kong’s ability to mobilize capital for infrastructure and sustainability projects across the Global South through innovative tools such as securitized loans. He also witnessed the signing of a strategic cooperation agreement between the Hong Kong Science & Technology Parks Corporation and a Saudi venture capital firm, covering joint promotion, startup referrals, and deeper integration of innovation ecosystems.

Meanwhile, Hong Kong-based companies are expanding into the Gulf, drawn by political stability, infrastructure development, and a favorable investment climate. The Belt and Road Initiative remains a cornerstone of this engagement, facilitating infrastructure investment and trade between Asia and the Middle East.

Hong Kong’s growing engagement with the UAE and Saudi Arabia

Hong Kong-based businesses are increasingly setting up operations in the UAE and Saudi Arabia, drawn by large-scale economic diversification programs, infrastructure megaprojects, and supportive business environments. These two Gulf economies offer a secure platform for companies looking to tap into the region’s transformation.

The Belt and Road Initiative (BRI) has further solidified ties by enhancing infrastructure investment and trade connectivity across the Middle East and Asia. Hong Kong’s role in the BRI positions it as a natural partner for Gulf countries aiming to link into Asia’s growth story.

According to HSBC report,  Hong Kong’s trade with the Gulf more than doubled following Chief Executive John Lee’s 2023 visit to the UAE and Saudi Arabia. That visit led to major cooperation agreements, reinforcing Hong Kong’s role as a central hub for Gulf capital and engagement with Asia.

Energy remains foundational: hydrocarbons still account for around half of Gulf-Asia trade, with 50 percent of Asia’s oil imports in 2023 coming from the Gulf and wider Middle East. As China’s oil demand is expected to peak around 2030, it will remain a vital market for Gulf producers—alongside India and ASEAN, which will drive the next wave of energy demand.

Beyond energy, Gulf investment in economic diversification is accelerating. Sovereign wealth funds are not only chasing returns but are also building long-term partnerships and joint ventures in Asia. While China and India are major destinations, developed economies like Japan, South Korea, and Hong Kong are receiving increased attention—particularly for their financial infrastructure and access to broader markets.

At the same time, Asian high-net-worth individuals (HNWIs) and asset managers are establishing a presence in Gulf hubs like Dubai, attracted by social reforms, wealth accumulation, and long-term growth potential. This two-way flow is deepening financial integration between the Gulf and Asia.

Capital market collaboration is another key growth area. The listing and privatization of Gulf state-owned enterprises are drawing capital from Asia, while cross-listings between Gulf and Asian stock exchanges are likely to strengthen regional capital markets.

Cooperation in non-oil sectors is also gaining traction—particularly in renewable energy, hydrogen, electric vehicles, and green finance. China leads in areas such as solar panel production and EV manufacturing, while Japan and South Korea are emerging as hydrogen and clean tech partners. These alignments match the Gulf’s vision to become a hub for green and blue hydrogen and industrial decarbonization.

In the tech sector, however, cooperation is challenged by rising geopolitical tensions. The U.S.-China competition—especially around AI and semiconductors—has pushed some Gulf actors to carefully balance partnerships. Still, the Gulf continues to invest in domestic semiconductor capacity and seeks Asian expertise in smart infrastructure and digital innovation.

Despite promising developments, risks remain. Oil price volatility, regional instability, and shifting US foreign policy—particularly under the Trump administration—is impacting the Gulf’s pivot to Asia.

Conclusion

Amid a rapidly evolving geopolitical and economic landscape, Hong Kong is emerging as a trusted platform for Gulf capital seeking diversified, long-term growth in Asia. From green finance and Islamic banking to tech innovation and trade facilitation, the city is aligning its capabilities with the Gulf’s ambitions. As the GCC continues to deepen ties with Asia, Hong Kong is poised to serve as the bridge connecting visions, capital, and opportunity across both regions.

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