Gulf-Asia corridor: The $578bn economic powerhouse reshaping global investment flows

The eastward shift of global capital is accelerating, with the Asia-Gulf corridor projected to reach $578 billion in bilateral trade by 2030, according to leading executives and economists at HSBC’s MENAT Future Forum in Dubai.

“Traditional financial centres are adapting to a new world where the Middle East and Asia are driving rather than following global investment trends,” Selim Kervanci, CEO of HSBC for the Middle East, North Africa and Türkiye (MENAT), told Arabian Business in an exclusive interview on the sidelines of the event.

“While developed markets are wrestling with economic headwinds, an unprecedented $3 trillion in capital spending across the GCC is recalibrating the global investment landscape for investors,” Kervanci added.

The annual forum, now in its ninth year, has become the region’s largest private gathering of international investors, regulators, exchanges, and market participants, with over 700 delegates attending to discuss opportunities in the rapidly transforming regional economy.

Top of mind was the growing activity between Asia and the Middle East. Travelling from Hong Kong to the Four Seasons, Jumeriah, Dubai where this year’s Forum was held, Frederic Neumann, Chief Asia Economist and Co-Head of Global Research Asia at HSBC, explained that the corridor is evolving significantly beyond traditional energy sectors.

“We see a lot of interest from investors across Asia looking at the GCC as an area where it’s no longer just about energy,” Neumann said. “It’s about the domestic consumer market. Rapidly growing Asian companies want to come here, work with local entrepreneurs, understand the markets and integrate their businesses for the long term.”

This shift reflects a profound recalibration of global supply chains, with Asian companies exploring manufacturing operations in the Gulf to position themselves closer to consumers. The bilateral relationship goes beyond goods to include services such as aircraft maintenance, tourism, and financial interconnection.

Trade between the GCC and emerging Asia has already shown remarkable growth, rising by approximately 34.7 per cent to $516 billion in 2022 alone. According to market projections, Gulf-China trade is expected to overtake Gulf-West trade by 2027, with GCC trade with emerging Asia set to surpass trade with advanced economies by 2028.

Kervanci emphasised that for investors, “the question is no longer whether to invest in the Middle East region or not, but rather how to harness the full potential of the region’s transformation.”

He outlined several strategic levers for investors to consider, including sector diversification, capitalising on IPO momentum, and exploring private capital and alternative investments.

New markets emerging

While China has traditionally been a dominant player in the region, and India maintains historically close connections, Neumann identified Southeast Asian nations as emerging players in the Gulf-Asia relationship.

“Indonesia and Malaysia already have an affinity with the GCC countries, Thailand is there as well, even Vietnam,” he noted. “Those are all economies growing very rapidly, and they have traditionally looked at the US as a partner, Europe as a partner. They’re starting to diversify and increasingly look at the GCC as well.”

The strengthening relationship is reflected in trade statistics, with the Middle East and Asia together now accounting for 30 per cent of global financial assets. Combined, the regions host nine of the world’s ten biggest sovereign wealth funds and eight of the 20 biggest pension funds, according to HSBC research.

Capital spending and investment flows

Simon Williams, Chief CEEMEA Economist at HSBC, highlighted the significance of the region’s capital spending plans in reshaping global investment flows.

“The capital spending cycle really stands out on a global basis,” Williams said. “There are very few parts of the world with access to the funding or the confidence, frankly, to deliver the kind of capital spending cycle the Middle East is currently pushing through.”

Williams believes this will reshape Middle Eastern economies over the long term, while serving as a major growth driver in the near term. “It’s also one of those economic dynamics drawing attention from outside the region, especially from parts of Asia, particularly from China,” he added.

The capital spending coincides with strong consumption growth across most of the MENAT region, driven by demographics, continued inflow of new migrants, and strong sentiment. Williams projects economies in the Middle East, North Africa, and Turkey to grow by 3.8 per cent this year.

UAE as investment epicentre

The UAE has emerged as a focal point for Asian investment, with the country establishing itself as a trillion-dollar capital market with exceptional FDI performance.

Speaking to Arabian Business at the forum, Mohamed Al Marzooqi, CEO of HSBC UAE, emphasized the country’s global standing.

“The UAE has evolved from a regional hub into a trillion-dollar capital market ranking second globally for FDI inflows with $30 billion in 2023 and maintaining this position as the world’s leading destination for Greenfield FDI for three consecutive years,” Al Marzooqi said.

He further highlighted the transformation of Abu Dhabi. “In 2024 Abu Dhabi ranked as the world’s top city for sovereign wealth fund capital managing $1.67 trillion in assets.”

The CEO of the largest international bank in the UAE emphasised that “the country’s deepening capital markets, which exceeded $1 trillion in market capitalization in 2024, and the strong connectivity to Asia are driving growth and creating new opportunities.”

Karim Tannir, Head of Banking for MENAT at HSBC Holdings, described the current period as a “golden era” for the region. “The UAE-Asia corridor is very important. Trade has increased exponentially, and we’re seeing a lot of attention by Asian investors coming in and us in the region going and investing in Asia,” Tannir noted.

Structural shift, not tactical play

Camille Asmar, Head of Equity Sales for Europe and Emerging Markets for HSBC, highlighted that the interest in Gulf markets represents a long-term structural shift rather than a tactical investment play.

“This is a long-term, structural story,” Asmar said. “There is a vision in place put in by the governments of the GCC, of the UAE, of Saudi, of Qatar, of Oman. There’s a clear vision that is not just a short-term vision, it’s a long-term vision.”

He noted that investor sentiment toward MENA equities, particularly Saudi Arabia and the UAE, is “very bullish, very constructive,” with new sources of global investors and capital flowing into the region.

Asmar attributed this to the region’s monetary policies being “very positively received by the international investment community,” with emerging market equities in the Middle East and GCC offering higher returns with controlled monetary policy.

Looking ahead

As the Middle East and Asia continue to strengthen their economic ties, the implications for global capital flows could be substantial. With both regions now recycling their savings into investments within their own markets rather than primarily in developed economies, a new pattern of global investment is taking shape.

The ninth HSBC MENAT Future Forum highlighted that the eastward shift of capital is not merely a temporary trend but a fundamental realignment of global economic power.

The Forum featured over 66 external speakers from different organisations and sectors, with attendees from across the globe gathering to discuss core themes including shifting dynamics for 2025, macroeconomics and global markets, innovation and transformation, and the role of artificial intelligence.

This article was first published by Arabian Business on 7 March 2025.