Sovereign wealth funds in the East are in a relatively better position to invest and tap into the Middle Eastern growth dynamics, more effectively than their Western counterparts such as pension funds that now have the added liability of paying out as much money as their returns from investments, according to Ben Simpfendorfer, Chief China Economist, Royal Bank of Scotland (RBS), Hong Kong.
Simpfendorfer’s comments came during his lecture organized by the Dubai School of Government (DSG) to describe the growing relationship between China and the Arab world. The event was attended by students, government officials and investment professionals.
Simpfendorfer outlined how the two regions, which had traditionally been trade partners, have injected a new vigor into their diplomatic and commercial relations in the light of social, economic and political developments in recent times. During the talk, Simpfendorfer touched on a number of topics covered in his book, The New Silk Road: How a Rising Arab World Is Turning Away From the West and Rediscovering China, such as the importance of oil and Islam, potential risks to the relationship such as the unrest in Xinjiang, which threatens to turn Muslim sentiment turns against China, and China’s role as a growth model for the Middle East.
Elaborating further on the variations between divergent investment patterns, Simpfendorfer said: “Eastern economies are growing, but their financial markets are lagging. Their bond markets are still maturing, while private equity investments are subject to often weak rule of law and nationalist interests. This makes it difficult for Western investors backed by pension funds to endorse these projects.
“On the other hand, the sovereign wealth funds of the East have fewer limits on their ability to buy such assets. So, it’s no surprise that the Middle Eastern funds, in particular, have been aggressively buying assets in their neighboring economies.”
Prior to joining RBS in 2005, Ben Simpfendorfer worked in a similar role at JPMorgan Chase. Fluent in both Arabic and Chinese, his editorials have appeared in several global financial dailies. Aside from authoring The New Silk Road, Simpfendorfer has also contributed to the forthcoming The Gulf and the Great Powers, co-published by the US Naval Academy and UK Joint Services Command.
Dr. Tarik Yousef, Dean of the Dubai School of Government (DSG), said: “Ben Simpfendorfer’s vast and unparalleled experience in both the Middle East and China has shaped his unique and holistic perspective, and we are delighted to gain tremendous insight through this interaction. China’s rise to global prominence is a factor which informs many aspects of international policy making today, and we value this opportunity to shed light on how the Arab world can leverage China’s rise to positively benefit this region in a variety of ways.”
Established in 2005 in cooperation with the Harvard Kennedy School, the Dubai School of Government is committed to the creation of knowledge and the dissemination of global best practices in the Arab world. The institution conducts various programmes that seek to enhance the region’s capacity for effective public policies.
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