Singapore’s GIC shifts assets to emerging markets

Singapore sovereign wealth fund GIC has shifted more assets to emerging markets amid uncertainly over the recovery of the US and European economies, its annual report said Tuesday.

The Government of Singapore Investment Corporation disclosed the shift as it reported a steady 7.2 per cent rate of return on investments in the year to March, from 7.1 per cent a year ago, on a nominal 20-year annualised basis.

GIC, which manages the republic's reserves, cautioned that global financial markets still faced significant challenges including the pace of recovery in the world's major economies from the 2008 financial crisis.

'Although the global financial crisis is now behind us, we still face challenges in the economic and investment environment,' said Ng Kok Song, GIC's group chief investment officer.

'The sustainable recovery of the developed economies remains uncertain, while the emerging economies face challenges in restraining inflationary pressure and currency appreciation,' he said in a statement.

In its annual report, the fund said there was a further five per cent shift in its asset allocation to emerging-market equities.

'The main changes were the increase in exposure to Asia and Latin America and the reduction in exposure to the United States and Europe,' GIC said.

'These changes largely resulted from the asset allocation shift to emerging market equities from developed market equities,' it said.

GIC, one of two investment vehicles set up by Singapore, invests in a wide range of assets such as equities, real estate and natural resources with a 20- year horizon as the key focus.

Singapore's total foreign reserves stood at just under $240 billion in May, according to the central bank's website.

Among GIC's main investments are stakes in Citigroup, UBS as well in China Industrial Bank, China International Capital Corporation and commercial properties in major world capitals.

Unlike Temasek Holdings, the other state investment firm, GIC does not give any data on revenues or profits apart from the overall rate of return.

Earlier this month, Temasek Holdings said it earned a net profit of Sg$13 billion ($10.8 billion) in the year to March from Sg$5.0 billion the previous year.

Source : New Age

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