By P.R. Venkat
SINGAPORE--Singapore's sovereign-wealth fund will maintain a cautious investment strategy due to greater global economic uncertainties and has cut its exposure to developed-world equities, an indication of its defensive stance to riskier assets.
GIC Pte. Ltd., which is estimated to oversee more than $390 billion in assets and is the world's eighth-largest sovereign-wealth fund, said it is concerned about escalating global trade friction and investment arrangements. It also said market uncertainty remains elevated.
Global markets have been volatile in recent weeks due to trade tensions between the U.S. and China. Earlier this week, President Donald Trump's administration said it would assess 10% tariffs on a further $200 billion in Chinese goods. China said this wasn't acceptable and promised to retaliate.
"The tight integration of global supply chains will see tariffs or restrictions having a broader effect across markets than for just the countries directly affected," GIC CEO Lim Chow Kiat told The Wall Street Journal on Thursday.
GIC, which manages Singapore's forex reserves and owns stakes in Citigroup Inc. and UBS Group AG, says it takes a long-term investment view. GIC has been active in the technology space since this year. In January, it was part of a consortium led by Blackstone Group LP that acquired a majority stake in financial-information company Thomson Reuters Corp. for $17 billion. It also participated in the $14 billion fundraising by Ant Financial, the Chinese fintech firm that operates the Alipay payment platform.
GIC also sees investment opportunities in real estate and emerging markets, Mr. Lim said. In April, GIC invested $1.3 billion in Vietnam's largest property company and picked up shares in the country's private bank Techcombank.
He said other risks to the global economic environment include moves to tighten monetary policy-especially by the Federal Reserve-and high asset valuations which have made the fund take a cautious stance.
GIC doesn't disclose its assets under management,. but the Sovereign Wealth Center estimates it oversees $390 billion.
The annual report for the fiscal year that ended March 31 showed that GIC's asset mix saw allocation for the developed-equities market fall to 23% from 27% while it had increased its holdings of cash and nominal bonds to 37% from 35%.
The U.S. remains GIC's largest investment destination, accounting for 32% of its global allocation, while Japan and the eurozone each account for 13%. The fund's annualized nominal rate of return from its investments for the 20 years through March was 5.9%, while for the five-year period it was 6.6%.
Write to P.R. Venkat at [email protected]
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