GIC Recoups Losses, Reveals Emerging Markets Outperform

(September 28, 2010) — The Singapore state investment agency – the Government of Singapore Investment Corporation (GIC) – has recovered most of its losses caused by the 2008 financial crisis, and has said it will focus increasingly on emerging markets as they trump developed economies.

“…we expect high growth in the emerging economies to continue, with expanding domestic demand offsetting slower growth in export demand,” group chief investment officer Ng Kok Song said in GIC’s annual report.

Late Monday, the GIC, ranked as the world’s sixth-largest state investment company by Sovereign Wealth Fund Institute in California, revealed the average rate of return on its investments increased to 7.1% in US dollar terms in the year ending March, up from 5.7% the previous year. The fund revealed holdings in the US fell to 36% of its portfolio in the year ended March 31 from 38% the previous year.

“Global stock markets recovered strongly in 2009. This was a rebound from the devastation in the financial crisis of 2008,” according to the GIC’s report. “The increase in value of the government’s portfolio in the financial year to 31 March 2010 largely offset the loss in the previous year.”

Unlike Temasek Holdings, the notoriously secretive fund failed to provide the value of its assets or how much they rose or fell.

According to the GIC, its holdings of developed market equities rose to 41% of its portfolio as of March 31 from 28% a year earlier. Investments in fixed income and cash fell to 24% from 32% as funds were used for the purchase of equities, while its allocation to alternative investments — including real estate, private equity, infrastructure and natural resources — fell to 25% from 30%.