Qatar’s sovereign wealth fund is reportedly on the brink of securing a significant foothold in China’s robust mutual fund market, signaling deeper economic ties between the Middle East and China.

What Happened: The Qatar Investment Authority (QIA) is set to acquire a 10% stake in China Asset Management Co. (ChinaAMC), which ranks as China’s second-largest mutual fund company, Reuters reported on Tuesday. This move underscores the growing economic connections between China and the Middle East against a backdrop of increasing global tensions.

The investment is part of a larger push to bolster political, economic, and financial cooperation between China and Gulf nations. This push has become more pronounced amid the ongoing Gaza War and the Russia-Ukraine conflict.

China has been importing more liquefied natural gas (LNG) from the Middle East, particularly from Doha, cementing these relationships. The QIA’s planned purchase of the ChinaAMC stake from Primavera Capital is in line with the Middle East’s recent $7 billion investment in China, marking a notable uptick from the previous year, as per Global SWF.

Awaiting the green light from Chinese regulators, the China Securities Regulatory Commission (CSRC) has been reviewing an application for the transfer of a stake exceeding 5% since May 23. Should the deal go through, QIA, with over $500 billion in assets under management, would become the third-largest shareholder in ChinaAMC, which oversees more than 1.8 trillion yuan ($248 billion).

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While the QIA has not publicly commented on the transaction, the deal would facilitate an exit for Primavera and potentially pave the way for QIA in China’s $4.3 trillion mutual fund industry. The CSRC has yet to respond to Reuters regarding the pending deal.

Why It Matters: The QIA’s move to invest in ChinaAMC comes amid a series of strategic shifts within China’s financial landscape. Earlier this year, China announced the merger of several state-owned bad debt managers with its main sovereign wealth fund, the China Investment Corp, to enhance the stability of its capital markets and boost investor confidence.

Moreover, the United States has recently slowed down the export of AI chips to the Middle East citing national security concerns. The U.S. felt that Chinese companies might be able to access these advanced chips through data centers in the Middle East

China’s affirmation of support for Tehran amid Iran-Israel tensions further demonstrates the strategic importance of Middle Eastern alliances for China. China’s commitment to its relationship with Tehran is indicative of its broader geopolitical strategy in the region.

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Image by esfera via Shutterstock

This story was generated using Benzinga Neuro and edited by Pooja Rajkumari