Singapore GIC sees green shoots in uncertain global environment


Singapore GIC sees green shoots in uncertain global environment

GIC manages over $ 453 billion in assets and is the world’s seventh largest sovereign wealth fund in terms of total assets

Singapore’s sovereign wealth fund GIC Private Ltd. Remains cautious in the face of pandemic uncertainty and inflation concerns, but sees new growth opportunities emerging in areas such as technology, sustainability and the reconfiguration of global supply chains.

The GIC said in its annual report on Friday that it expects the global economic recovery to continue amid fiscal stimulus and monetary policy support, albeit at different rates and with a wide range. potential results in the medium and long term.

He added that with valuations stretched as investors anticipate a strong economic recovery, he expects returns from a wide range of asset classes to be low over the next 5-10 years.

At the close of the fiscal year ended in March, the sovereign fund’s exposure to emerging market equities was up 2 percentage points year on year to 17% of its total portfolio. Exposure to developed market equities remained at 15%.

Nominal bond and cash holdings fell to 39% from 44%, a reversal from last year’s rise as global equity markets rallied relative to fixed income. The fund’s share of private equity and real estate assets increased due to “robust business activity and strong asset performance,” GIC said.

GIC manages more than $ 453 billion in assets and is the seventh largest sovereign wealth fund in the world in terms of total assets, according to the U.S.-based Sovereign Wealth Fund Institute. GIC does not disclose its assets under management.

GIC, which manages Singapore’s foreign exchange reserves and owns stakes in Citigroup Inc. and UBS Group AG, said it continues to take a long-term view of its investments. The 20-year nominal annualized US dollar return on his portfolio was 6.8% during the period ending March, according to the report. Its average real rate of return – above the global inflation rate – was 4.3% over the period.

The United States has remained the largest geographic area of ​​exposure for GIC over the past year, accounting for 34% of the fund’s portfolio. Asia excluding Japan was second with 26%.

The GIC said it sees investment opportunities in accelerating technological transformation, growing demand in the area of ​​sustainability, and responding to the needs of businesses changing supply chains amid geopolitical tensions. persistent.

“It is increasingly recognized globally that more resilient and long-term global economic growth will depend on a shift to sustainable practices,” said GIC Managing Director Lim Chow Kiat in the report. Regarding technology, he noted that the pandemic has spurred development in areas such as telemedicine, digital payments and online entertainment.

The ICG expects the economic recovery from the pandemic to continue, but has warned that in the longer term, the range of outcomes “widens considerably.”

“While stimulus measures in major economies have helped ease the impact of lockdowns on household incomes, job losses and corporate insolvencies, getting out of these extraordinary policies could be difficult,” he said. -he declares. A strong recovery and abundant liquidity could boost inflation, potentially limiting policy easing, he added.

GIC plans to open an office in Sydney next year, adding to 10 global offices that manage assets in more than 40 countries.

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