China’s removal of quarantine requirements for inbound travelers has signalled that borders are reopened after three years of strict pandemic-related travel restrictions.

Beijing has also reopened air and sea travel with the special administrative region of Hong Kong, ahead of the lunar new year. This marks the final step of the end of Beijing’s zero Covid policy, which has involved harsh lockdowns, mass testing and travel limitations to prevent viral transmission.

The new situation allows the potential for new offices to be set up by state-owned investors. Shanghai and Beijing have not seen new overseas operations established by sovereign wealth funds of public pension funds since 2020 while Hong Kong and Singapore have each added to their tallies. Despite the civil unrest in the special administrative region, Hong Kong remains the most popular location for foreign SOIs with a total of nine overseas offices and a headcount of 249 personnel (the average team is 28), followed by Singapore with 210 personnel operating from eight offices (averaging 26).

In mainland China, financial center Shanghai has the slight edge over Beijing with seven and six offices, respectively with heavily China-exposed Singaporean investors GIC and Temasek leading in terms of headcount. Shanghai hosts a total of 94 personnel and an average of 13 per office, while Beijing has 60 and an average of 10 per office. In 2020, the Dutch pension fund manager APG opened offices in both cities; it retains significant operations in Hong Kong, but has so far avoided setting up shop in Singapore.

The easing of Covid restrictions in mainland China promises the potential for a surge in hiring activity with the expansion of existing teams and new offices. Added to that is the economic stimulus from an end to the disruption of draconian lockdown measures, which have severely undermined industrial capacity utilization and dented business confidence.

SOIs voted with their feet and turned their backs on China, mirroring the unease of large sections of the Chinese population who had grown weary of the lockdowns. Their direct investment in China severely diminished and last year Singapore’s Temasek was by the most active, with the volume of its venture capital investments – heavily oriented to biotech – dwarfing all other funds combined. APG made one of the most notable investments, backing GLP’s latest China logistics vehicle - GLP China Value-Add Partners IV - which raised US$1.2 billion at its first close.

Since the onset of the Covid pandemic in 2020, three state-owned investors have announced new offices in Singapore – Ontario Teachers (OTPP), Qatar Investment Authority (QIA) and last year Alberta Investment Management Corp (AIMCo), with more than 30 personnel in total. Meanwhile, Saudi Arabia’s Public Investment Fund (PIF) is the only state-owned investor establishing new operations in Hong Kong with a small one-man rep office last year. No new overseas offices were established by SOIs in China in 2021 or 2022.

AIMCo chose Singapore over Hong Kong and Shanghai as its Asian base of operations. The fund manager is seeking to use Singapore to advance its private equity strategy in Asia, including Australia and New Zealand. At present, just 2% of its private portfolio and 7% of its infrastructure investment is in Asian markets. With stability and economic diversification, Singapore caught up with Hong Kong amid unrest and increased regulatory pressure from Beijing.

Related funds AIMCo APG GIC OTPP PIF Temasek
Related tags China Offices