Singapore’s sovereign wealth fund, GIC, is shifting its investment strategy to focus more on emerging markets like India, Indonesia, and Vietnam. The move was prompted by escalating tensions between the United States and China in a bid to navigate potential trade and capital flow restrictions.

According to Nikkei Asia, Singapore’s state-run sovereign wealth fund, GIC, is adjusting its investment strategies in response to escalating US-China tensions, with an increased focus on emerging markets such as India, Indonesia, and Vietnam.

Chief investment officer Jeffrey Jaensubhakij revealed that the pivot in strategy reflects the need to navigate potential restrictions affecting capital flows and trade between the US and China.

Mirroring the broader cautionary tone among global investors, GIC is moving capital away from China towards sectors and countries that are benefitting from shifts in the global supply chain, including Mexico, India, Indonesia, and Vietnam.

“Major electronics and semiconductor enterprises, including Apple, are also striving to reduce their China-reliant manufacturing, favouring expansion in countries such as India and Vietnam,” cited Nikkei Asia.

However, GIC CEO Lim Chow Kiat stressed the fund’s sustained interest in long-term Chinese opportunities, particularly within the green technology and electric vehicle sectors.

Despite the recovery setbacks in China, Lim reaffirmed GIC’s intent to participate in attractive deals, suggesting that the resumption of robust flows might require time.

The revelation came prior to the release of GIC’s annual results. It reported a slightly improved 20-year average annual return of 4.6 per cent above inflation.

The US has sustained its position as GIC’s largest investment destination at 38 per cent, while investments in Asian economies, excluding Japan, have decreased.

GIC’s mandate from the Singapore government is to deliver long-term returns that exceed global inflation. The fund is upping its investments in real estate and infrastructure projects as a safeguard against rising inflation and uncertainty in the global economy.

Vietnam Investment Review