Married three A-share listed companies in half a month, and Middle East Capital started a new round of goods sweeping in the Chinese market

Since 2023, the number of Middle East capital investment events in Chinese enterprises has exceeded 10, and the amount of investment and financing events has exceeded 20 billion yuan.

In just half a month, three listed companies announced "marriage" with Middle East capital. Middle Eastern tycoons have set off a new round of "sweeping tide" in China.

Since this year, Middle East capital has allocated Chinese assets in a large amount for many times. In March this year, Saudi Aramco, the Saudi oil giant, bought 10% shares of Rongsheng Petrochemical (002493. SZ) with 24.6 billion yuan; In June, Weilai signed a share subscription agreement with Abu Dhabi investment institution CYVN Holdings, which made strategic investment of about 1.1 billion dollars to Weilai; In August, Fengxiang Shares (09977. HK) announced that on August 26, the Middle East sovereign wealth fund Abu Dhabi Investment Authority bought nearly 157 million shares of Fengxiang Shares, with an average of HK $15132 per share.

According to the surging news statistics, as of October 14, the Middle East sovereign wealth funds represented by the Abu Dhabi Investment Authority and the Kuwait Investment Authority had invested as many as 62 A-share listed companies.

Middle East Capital Crazy "Scavenging" in A-share Market

On the evening of October 11, Mitsubishi Power (300733. SZ) disclosed a Announcement on Signing the Strategic Cooperation Framework Memorandum.

Xiling Power announced the signing of the Strategic Cooperation Framework Memorandum with Benomyr Holding Group Co., Ltd. (hereinafter referred to as "Benomyr"), and planned to set up a joint venture to invest 700 million yuan to develop new energy vehicle parts - lightweight subframe and efficient electric scroll compressor; After the above projects are successfully developed, relevant production lines will be constructed. It is estimated that the annual output of 2 million lightweight subframes and 500000 high-efficiency electric scroll compressors for automobiles will be achieved. In the future, as a strategic investor of Mitsubishi Power, Benomir will carry out in-depth cooperation with the company, including but not limited to subscription of private placement shares and project cooperation.

It is worth noting that Ben Omir, from the Middle East, is a company established in the Emirate of Abu Dhabi in 2002. Its business involves automobile, tourism, finance, real estate, engineering, services, high-tech, investment and other fields. Just two days before the announcement of Silling Power, that is, on October 9, BAIC Bluevale (600733. SH) also announced the news of cooperation with Ben Omir on the investor relations platform. The two sides plan to jointly explore the two major new energy vehicle markets in the Middle East, the United Arab Emirates and Saudi Arabia. At present, our company has decided to purchase 600 polar foxes as the first order.

Recently, not only Ben Omir but also Saudi Aramco, the Saudi oil giant, bought 10% shares of Rongsheng Petrochemical with a huge investment of 24.6 billion yuan in March this year.

On the evening of September 27, Dongfang Shenghong (000301. SZ), a private refining and chemical enterprise, announced that Saudi Aramco or its related parties intended to become strategic investors in Jiangsu Shenghong Petrochemical Industry Group Co., Ltd., a wholly-owned subsidiary of the company, and planned to hold a minority stake in Jiangsu Shenghong; Both parties intend to cooperate in the long-term purchase and supply of crude oil and other raw materials, the sale of chemical products and fuel products, and the licensing of high value-added technologies.

In addition, Saudi Aramco disclosed on October 11 that it signed a memorandum of understanding with Nanshan Group Co., Ltd., Shandong Energy Group Co., Ltd. and Shandong Yulong Petrochemical Co., Ltd. on the same day to promote the discussion about Saudi Aramco's possible acquisition of 10% strategic equity of Shandong Yulong Petrochemical Co., Ltd. The transaction depends on due diligence, negotiation of transaction documents and necessary regulatory approval.

Industry insiders believe that the "sweeping" of Saudi Aramco in China is not the end but the beginning. Guotai Jun'an analyzed in the research paper "Where will the money from the Middle East be invested after Saudi Aramco invested in Rongsheng?" in April that Saudi Aramco's investment in Rongsheng Petrochemical opened a new chapter in Arab countries' investment in China, and the subsequent 10th anniversary of the "Belt and Road" will further strengthen China Arab cooperation. Under the motivation of industrial diversification and reducing dependence on the US dollar and the United States, Investment in China may increase.

"Sovereign wealth funds in Arab countries are huge in scale and perform investment functions on behalf of the country's will. Their investment direction to a certain extent represents the country's policy orientation." Guotai Jun'an stressed that, "Arab sovereign investment funds are actively expanding into active management, diversified industries and emerging markets. From its investment orientation, Arab countries mainly focus on energy, advanced manufacturing and finance. In particular, China Arab new energy cooperation has broad space and great flexibility."

62 listed companies with heavy positions in Middle East capital

More than a decade ago, Middle East capital began to enter the Chinese market. Among them, Abu Dhabi Investment Authority (ADIA), the world's third-largest sovereign wealth fund, obtained QFII qualification in 2009 and began to enter the A-share market, while Kuwait Government Investment Authority (KIA), the world's fourth largest sovereign wealth fund, obtained QFII qualification at the end of 2011. The surging news noted that at present, among the ten major shareholders of A-share listed companies, Middle East capital represented by Abu Dhabi Investment Authority and Kuwait Investment Authority frequently appears.

According to Wind data statistics, the semi annual report of listed companies in 2023 shows that as of the end of the second quarter, Abu Dhabi Investment Authority appeared in the list of top ten shareholders of outstanding shares of 26 A-share listed companies, with a total number of 479.62 million shares and a total market value of 7.404 billion yuan; The top 10 A-share listed companies with the highest market value are Zijin Mining (601899. SH), Dongfang Yuhong (002271. SZ), Haida Group (002311. SZ), Hengli Hydraulic (601100. SH), Yunnan Aluminum (000807. SZ), Tonghua Dongbao (600867. SH), Beixin Building Materials (000786. SZ), Daquan Energy (688303. SH), Yutong Bus (600066. SH), and China Jushi (600176. SH).

Among them, the stocks newly purchased by Abu Dhabi Investment Bureau in the second quarter of 2023 include ten A-share companies, namely Qianhe Flavor Industry, Zijin Mining, Jiankangyuan, Zhongtian Technology, Shandong Pharmaceutical Glass, Shengxing Shares, Minfa Aluminum, Yunnan Aluminum, Tongling Nonferrous Metals and Lanci Technology.

At the end of the second quarter, KIA appeared in the list of the top ten shareholders of tradable shares of 36 A-share listed companies, with a total number of 3117.1 million shares and a total market value of 5.618 billion yuan; The 10 A-share listed companies with the highest market value are Sanhua Intelligent Control (002050. SZ), Hengli Hydraulic (601100. SH), Satellite Chemical (002648. SZ), Chenguang Shares (603899. SH), Bettany (300957. SZ), Maiwei Shares (300751. SZ), Angel Yeast (600298. SH), Zhonggu Logistics (603565. SH), Kaiying Network (002517. SZ), and Zhongjin Gold (600489. SH).

Among them, the new stocks bought by the Kuwait Investment Bureau in the second quarter of this year include Dingtong Technology, Tieke Rail, Bettany, Zhonggu Logistics, Chenguang Shares, Tianrun Dairy, CICC Gold, Huajian Group, Kaiying Network, Hisense Home Appliances, Shengtian Network.

Middle East capital asset allocation inclines to China

Not only the stocks in the secondary market, but also the asset allocation of Middle East sovereign wealth funds in China includes private equity, bonds and infrastructure construction of "unicorn" enterprises.

IT orange data shows that since 2023, the number of Middle East capital investment events in Chinese enterprises has exceeded 10, and the amount of investment and financing events has exceeded 20 billion yuan.

In addition, in January this year, Shenzhen announced the introduction of the Middle East sovereign fund Saudi Arabia Fund for the first time and the establishment of Blue Ocean Techcode (Shenzhen) Private Equity Investment Fund Co., Ltd. in China. The first fund with a scale of more than 1 billion dollars will officially settle in Shenzhen Xiangmihu International Venture Capital Street. In February, Eltek Capital, a venture capital fund supported by the Saudi Public Investment Fund and Alibaba, announced that it would raise $1 billion.

However, some insiders believe that the allocation of Middle East sovereign wealth funds to China is "not high enough". Ethan Chan, chairman of Hong Kong asset management company ARTE Capital Group, said in an interview with mainstream media that a sovereign wealth fund they worked with currently invests about 7% of its entire portfolio in Chinese assets, which is one fifth of its investment in the United States. "However, the fund is willing to double its investment in China, or even further." Nicolas Aguzin, director of the Hong Kong Stock Exchange, said that large sovereign wealth funds currently only invest 1% to 2% of their assets in China, and he believed that the number would increase 10 times.

"In order to seek industrial diversification and relatively get rid of dependence on the US dollar and the United States, Arab countries have a strong incentive to invest abroad, and will probably further increase foreign investment in the future. Under the opportunity of the China Arab Summit and the Belt and Road Initiative, China will become an important destination for Arab countries to invest. At the same time, due to the low initial investment base, its marginal elasticity is strong." Guotai Jun'an said.

CITIC Securities analyzed in its research report in August that, with the promotion of industrial upgrading strategies of major economies in the Middle East, it is expected to increase the layout of China's advantageous industries such as new energy and advanced manufacturing in the future, in line with its own development strategy.

key word: Middle East Saudi Arabia Investment Authority Abu Dhabi