Singapore investor GIC upbeat on China tech despite regulatory crackdown

24-Jul-2021 Intellasia | Reuters | 5:02 AM Print This Post

Singapore sovereign wealth fund GIC, one of the world’s top 10 investors, is optimistic about China’s technology sector despite the country’s sweeping regulatory actions that have hit shares in home-grown tech behemoths, including those listed in the US Since late last year, Beijing has moved quickly to rein in the giants of its so-called platform economy, which had taken advantage of an often-permissive regulatory environment to rapidly expand their businesses.

The crackdown has impacted the sector’s shares, with the CSI Overseas China Internet index down 22 percent so far this year, underperforming broader indexes.

GIC, with assets under management of $550 billion according to data platform Global SWF, retains a positive view on its Chinese investments due to the country’s handling of the pandemic, macroeconomic discipline and agility to respond to economic weaknesses, GIC Chief Executive Lim Chow Kiat told Reuters in an interview.

In the year to March 31, 2021, the fund saw its strongest annualised returns over a 20-year period, driven by a global market rally.

GIC’s China investment portfolio includes Alibaba and fintech affiliate Ant Group, food delivery firm Meituan, as well as real estate firm China Vanke and online healthcare platform JD Health International.

In its latest move, China’s cyberspace regulator launched a probe into ride-hailing giant Didi Global earlier this month, just days after Didi made its New York debut and raised $4.4 billion.

“If we looked at a lot of these actions, we would say they help in making the industries, the companies, the business models more sustainable,” said Lim, who joined GIC nearly 30 years ago as a portfolio manager.

Some analysts have said China’s regulatory crackdown would encourage fair competition and support broad-based growth.

“We see that China continues to come out with innovative business models and technology, (so) our confidence in the sector, and clearly the country remains positive,” Lim said.

In the year to March, GIC reported an annualised 20-year real rate of return its main performance gauge of 4.3%, the highest since 2015, and up from a comparable 2.7 percent in 2020.

The share of emerging market equities in GIC’s portfolio rose to 17 percent in the latest year from 15 percent a year ago, while the share of private equity increased to 15 percent from 13%. Allocation to bonds and cash fell to 39 percent from a record 44 percent a year ago.

GIC remains cautious on asset prices in general, Lim said.

Jeffrey Jaensubhakij, GIC’s group chief investment officer said high valuations meant the fund had to look at distinctive themes and hunt down specific areas to invest in.

While the COVID-19 pandemic has had a lasting impact on the real estate sector, which makes up 8 percent of GIC’s portfolio, the fund still sees room to make investments, especially in markets that are still moving towards urbanisation, Jaensubhakij said.


Category: Singapore

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