Growing connections between China and the Middle East are prompting Chinese and Hong Kong financial companies to set up shop in Dubai as they tap opportunities in trade finance and wealth management services.
Earlier this month, the Dubai Financial Services Authority (DFSA) granted state-owned investment bank China International Capital Corporation (CICC) a license to operate in the Dubai International Financial Centre, a special economic zone, Ian Johnston, the regulator’s chief executive, told Nikkei Asia on the sidelines of the Asian Financial Forum in Hong Kong on January 14.
“It’s a significant step forward for CICC to come in,” said Johnston, adding that the approval will allow the Chinese bank to handle deals and investments for clients.
CICC declined to comment, but in a speech to the forum on January 13, CICC chairman Chen Liang vowed to maintain cooperation with domestic and international partners to explore and cultivate new business growth points.
The Chinese bank’s move comes amid growing demand for trade finance and wealth management services linking the Middle East and China. Saudi Arabia and the UAE are key targets for Chinese and Hong Kong players seeking new growth venues as the economic outlook remains challenging at home.
“Originally the Chinese banks were going to just follow the clients,” Johnston said. “These days, they are branching out and entering into wealth management.” They might be targeting some of the roughly 300,000 Chinese in the UAE as potential clients, he added.
Wealth managers are building client-facing functions in Dubai, which is a popular location for global banks to establish regional headquarters and reach broader markets such as Africa, Johnston said.
He also sees an “uptick” in hedge funds from Hong Kong looking to obtain licenses from the DFSA.
Hong Kong and Chinese financial firms’ push into Dubai does not necessarily mean it’s a “zero-sum” game at the expense of their home markets, Johnston stressed. He said many wealth managers still locate their businesses in Hong Kong, where they have more resources that include anti-money laundering mechanisms.
Chinese companies also face competition from global firms for Middle Eastern opportunities. This includes London-headquartered HSBC Holdings, which recently revamped its corporate structure to combine the Asia Pacific and Middle East businesses in an “Eastern Markets” group, as it sees growing trade corridors connecting the two regions.
AIFT, a Hong Kong-licensed virtual insurer, late last year also obtained approval through a Dubai entity to provide insurance products for licensed Web3 platforms or blockchain technology-enabled internet services.
In October 2024, Hong Kong-based CSOP Asset Management and Hang Seng Bank’s investment arm listed two exchange-traded funds in Saudi Arabia’s Riyadh with a combined size of USD 1.5 billion.
Not everyone is rushing to the Middle East, however. Noah Holdings, one of China’s top wealth managers, had considered Dubai in 2023 but is not planning an active operation there, group CEO Yin Zhe told Nikkei Asia in a December 2024 interview. Its target clients, Chinese entrepreneurs, are not living in the city, although some had purchased properties. Instead, it is looking to expand in Japan.