Around 60% of sovereign wealth funds based in the Middle East intend to increase their allocations to Chinese assets over the next five years, according to the latest global sovereign asset management study conducted by Invesco.
The remaining 40% of respondents from the region plan to maintain their current exposure levels, underscoring sustained interest in the Chinese market.
The study, which surveyed 141 senior investment professionals across 83 sovereign wealth funds and 58 central banks managing a combined $27 trillion in assets, found that appetite for Chinese investments remains strong globally, particularly among state-backed institutions in emerging markets.
Sovereign investors in the Asia-Pacific region showed the highest level of enthusiasm, with 88% indicating plans to expand their China allocations, per the study.
African sovereign funds followed closely, with 80% looking to increase exposure. In North America, 73% of respondents expressed willingness to invest more in China, signaling a broad, cross-regional shift in asset allocation strategies.
Multiple factors are driving this interest. A majority of respondents, or 71%, cited the strong historical returns achieved in China as a primary reason for increased allocations.
Another 63% were motivated by the need to diversify their portfolios, while 45% pointed to the improved market access for foreign investors as a contributing factor.
Investment targets within China were also identified in the study. Sovereign funds showed a preference for sectors such as digital technology and software, advanced manufacturing and automation, as well as clean energy and green technology.
These sectors are seen as aligned with long-term structural trends and supported by Beijing’s policy initiatives aimed at fostering innovation and sustainability.
According to Invesco, the surveyed investors view China’s growth as increasingly self-reliant and not overly dependent on developments in Western economies.
This perception has made the Chinese market an attractive option for sovereign funds seeking both geographic and political diversification in their global portfolios.