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Middle East Conflict May Redirect Gulf Capital Toward Asia

Published: Mar. 5, 2026 5:09 p.m. GMT+8

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Escalating conflict in the Middle East following U.S. and Israeli strikes on Iran on Feb. 28 could reshape investment flows, potentially directing more Middle Eastern capital toward Asian markets including the Chinese mainland and Hong Kong, a strategist said.

The attacks triggered a broad selloff in risk assets, but the longer-term impact may be a reassessment by Gulf investors of how their overseas assets are allocated, according to Miao Yanliang, chief strategist at China International Capital Corp. Ltd.

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Middle Eastern conflict and U.S.-Israeli strikes on Iran triggered volatility and broad risk asset selloffs.
Gulf sovereign wealth funds may diversify away from developed markets, increasing investment flows to Asia, notably China and Hong Kong.
Middle Eastern funds, like Saudi Arabia’s PIF, have expanded in Asia, with Hong Kong and Singapore potentially gaining from capital shifts amid unrest.

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Who’s Who

China International Capital Corp. Ltd.: China International Capital Corp. Ltd. (CICC) is mentioned as the employer of Miao Yanliang, who serves as their chief strategist. Miao Yanliang suggests that escalating conflict in the Middle East could lead Middle Eastern capital to flow more towards Asian markets like mainland China and Hong Kong. This redirection would be due to Gulf investors reassessing their overseas asset allocation in response to increased geopolitical uncertainty.

Kuwait Investment Authority: The Kuwait Investment Authority is a sovereign wealth fund that has been expanding its ties with China. It established a representative office in Beijing and later opened an office in Shanghai in 2018.

Qatar Investment Authority: The Qatar Investment Authority (QIA), a sovereign wealth fund, established a China office in Beijing in 2014. This move reflects a broader trend of Middle Eastern sovereign wealth funds expanding their ties with China and potentially diversifying their portfolios towards Asian markets amidst rising geopolitical uncertainty.

Saudi Arabia’s Public Investment Fund: Saudi Arabia’s Public Investment Fund established its first Asian office in Hong Kong in 2022. In 2024, it signed a memorandum of understanding with the Hong Kong Monetary Authority to launch a $1 billion investment fund. This move indicates a growing diversification of Middle Eastern capital into Asian markets.

Citigroup: Citigroup, in a research note, indicated that if attacks on Middle Eastern financial hubs intensify, financial centers perceived as safer, such as Hong Kong and Singapore, could see increased capital inflows.

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What Happened When

2014：: Qatar Investment Authority set up a China office in Beijing.

2018：: Kuwait Investment Authority opened a Shanghai office after earlier establishing a Beijing representative office.

2022：: Saudi Arabia’s Public Investment Fund established its first Asian office in Hong Kong.

2024：: Saudi Arabia’s Public Investment Fund signed a memorandum of understanding with the Hong Kong Monetary Authority to launch a $1 billion investment fund.