GIC and the crisis: Singapore’s sovereign wealth Fund warns of international record debt

Singapore’s state Fund GIC warns of a global debt crisis, accounted for but, thanks mainly to good yields in the long-term growth. Until the end of the last financial year (31. March) increased the yield over the past 20 years by an average of 2.7 percent. The same period had brought in 2019, a growth of 3.4 per cent in the year. The new value is as low as last only during the world financial crisis in 2009.

Christoph Hein

Economics correspondent for South Asia/Pacific, based in Singapore.

F. A. Z.

In its annual report, GIC warns clearly in front of the world’s growing record debt and its consequences: “to Keep the Central banks’ key interest rates remained low, although the economic activity is on the increase, could people overheating economies, which will generate inflationary pressure.” This increase, in turn, spirals the risk of capital flight and Devaluation. By her own account, leads GIC a Portfolio of “significantly more than 100 billion dollars in more than 40 countries”. For comparison: Temasek Holdings, the state-owned investment company, under the leadership of the Prime Minister’s wife, lost in the past year, 2.2 percent of your portfolio from now 306 billion Singapore dollars (192,41 billion euros).

Conservative

GIC manages the foreign reserves of the wealthy city-state and is for a conservative system is known positioned. The reduction in the rate of growth does not reflect to the eye the Corona of a crisis with its dramatic consequences, but first of all, the Stress of the “huge profits” during the bubble, the technology-values in the late nineties of the last century, from the report window of 20 years, said GIC chief Lim Chow Kiat. Due to the high valuation of investments have positioned themselves GIC but even before the outbreak of the disease, conservative and, thus, the share of government bonds and cash reserves from 39 to 44 percent of high-hazards. The investments in equities in developed and emerging markets around 4 and 3 percentage points were reduced. The share of real estate remained with 7% stable.

before the Corona, it looked, therefore, so that the prices of equipment rooms in the face of weak fundamental data, reduced political game and growing geopolitical uncertainties offered no adequate compensation for the risk. GIC had reduced the risk in the Portfolio and it is a Stress Test exposed. This defensive attitude from, secured against the worst in the first quarter of 2020, says the report.

Like virtually all investors, GIC is interested in growth markets such as health care and technology. In view of the growth of electronic Commerce, and consumer transactions are as interesting as the topic of infrastructure, in particular, with a view to energy supply – it should recover in the aftermath of the pandemic. GIC also participated in data centres. “If Corona has proven anything, it’s that people can shop from home and want to be,” said the chief investor Jeffrey Jaensubhakij. Some – not-called – emerging countries were causing him concern with regard to their skills, with the Corona deal. But will expand the volume of investment in Asia, probably more because of urbanisation and the growth of a middle class were there.

more Asian companies on the world stage occur. Indonesia and Vietnam, but America remained interesting, said Jaensubhakij. Currently, the share of investment in Asia is 32 per cent, of the European mind in America, at 34 percent of the portfolio, while 19 percent.