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25 April 2024

Singapore's SWF eyes realty and private equity

Lee Kuan Yew (SUPPLIED)

By Reuters

Singapore's top wealth fund GIC is looking at investing in property and private equity, after rushing into global banks "too early" and seeing its multi-billion dollar portfolio slide 25 per cent from its peak.

Lee Kuan Yew, Chairman of GIC, one of the world's top sovereign wealth funds, said he saw the healthcare sector as being resilient to the downturn, but he said the financial sector would recover.

"We will most probably stay with the financials," Lee said in an interview.

"Eventually, it must recover. It is the circulation system of the world."

Prime minister of Singapore from 1959 to 1990, Lee said GIC can weather the storm for 10 years if necessary but the city-state's economy could shrink eight per cent this year as demand for its exports slides.

Lee said GIC bought "too early" into global banks such as Citigroup and UBS, which were both hammered by the financial meltdown that quickened in the second half of 2008.

"How could we have known this was the extent of the damage? You look at all the big-name banks that have gone down, misjudged the situation, ruined their careers," he said.

"When the market fell, we went into UBS and Citi. But we went in too early. That is part of the ride."

GIC last week converted its $6.88 billion (Dh25.2bn) worth of Citigroup preference shares into common stock at a price of S$3.25 a share to shore up the embattled US lender, realising in the process a loss of around half its investment.

Analysts estimated that the value of the fund was around $300bn a year ago, although GIC has only said it manages well over $100bn.

"A 25 per cent decline would probably suggest an out-performance against the global markets," said Song Seng Wun, economist at Malaysian bank CIMB in Singapore. The MSCI World Index reached a peak in November 2007 and has fallen almost 60 per cent since then.