GIC signals five emerging markets for future growth

The Government of Singapore Investment Corporation (GIC) has signalled a further shift towards selected emerging markets and to private markets, in its annual report published last week.

GIC has highlighted five emerging markets in particular for medium-term growth: China, India, Brazil, South Korea and Taiwan.

But Ng Kok Song (pictured), GIC’s chief investment officer, was quoted after a press briefing on the annual report, as saying the sovereign wealth fund would favour private markets over listed equities for its increased emerging markets exposure.

At the end of its March fiscal year, the broad asset allocation for GIC, which invests the country’s foreign exchange reserves, was: 51 per cent listed equities, 20 per cent bonds and 25 per cent alternatives. Geographically, investments were spread: 36 per cent in the US, 30 per cent in Europe and 24 per cent Asia.

Ng said that about 80 per cent of GIC’s emerging markets exposure would be accounted for the three BRICs (excluding Russia) and Korea and Taiwan.

He said the fund would not necessarily be taking the well-trodden path of public markets for its exposures, but rather look at real estate, private equity and infrastructure.

GIC reported a total investment return of 7.1 per cent for the year, against 5.7 per cent the previous year.

The fund, established in 1981, has a 20-year investment horizon mandated by the Singapore Government. It tends to invest more widely than the other Singapore sovereign fund, Temasek Holdings, which has concentrated more on the Asian region.

Tony Tan, GIC’s deputy chairman, said: “GIC started to selectively take on more risk from the second quarter of 2009, amidst growing confidence in the economic recovery. I am pleased that the 20-year return of the portfolio has improved.”