GIC Pte is “doubling down” on some sectors in China as the country remains investable, even if it has become hard to make top-down allocations, according to the Singaporean sovereign wealth fund’s chief executive officer.
(Bloomberg) — GIC Pte is “doubling down” on some sectors in China as the country remains investable, even if it has become hard to make top-down allocations, according to the Singaporean sovereign wealth fund’s chief executive officer.
China is leading the world in certain industries like green technology, Lim Chow Kiat said Wednesday on a panel at the 10th Milken Institute Asia Summit in Singapore. Consumption will play a bigger role in the nation over the long term and could present opportunities, he added.
Doubts over the investability of Chinese assets have gathered steam this year. Beijing’s efforts to restore investor confidence have had limited impact during a slowdown, and the US has stepped up oversight of its exposure to Asia’s largest economy. Lim’s comment reflects how Chinese investment opportunities have become trickier to identify for global wealth funds after years-long regulatory crackdowns and Covid measures.
China faces a challenge as it seeks to adopt a new economic model to continue generating good growth and jobs, Lim said.
“It’s difficult to make top-down allocations because the situation is very complex,” making it tough to invest based solely on themes, Lim said, without elaborating on the other sectors he’s keen on.
Hedge fund Two Sigma Investments LP’s Asia Pacific CEO Kenny Lam also struck a bullish tone on China in an interview with Bloomberg Television. He said the New York-based firm remains committed to the Chinese market over the long term, adding that building up onshore research and data teams is a key priority.
Others were less optimistic. The worst isn’t over yet for China’s property market even after the government rolled out measures to boost demand, Manraj Sekhon, chief investment officer for Templeton Global Equity Investments.
Property developers still don’t have the liquidity to complete projects, which is “bad news” for prices and sentiment, Sekhon said in a Bloomberg Television interview on the sidelines of the event. China hasn’t done enough to restore confidence in its economy as leadership and monetary and fiscal policies are all “in flux,” he said.
As a result, investors are in a transition phase that could be prolonged, Sekhon said. Still, he added that he likes new-economy companies such as platform and internet firms.
Alberta Investment Management Corp. is taking a “very cautious approach” toward China while looking to take advantage of opportunities related to its growth, CIO Marlene Puffer said in an interview at the summit.
The geopolitical situation “needs to settle,” and the firm doesn’t see that “we’re getting paid sufficiently to take that risk on this time,” Puffer told Bloomberg Television. The Canadian pension fund’s current exposure to China is under 4% of assets and its exposure is mainly through passive index investments, she said.
Investors are coming to terms with the diversification of manufacturing away from China. “That’s not going to reverse,” Ashish Goyal, Asia-Pacific head at Ontario Municipal Employees Retirement System, said during a panel discussion.
Still, he pointed out that even if China grows at 3% or 4% rather than 6%, “that’s going to still create a lot of opportunity,” especially stemming from manufacturing activity to meet domestic demand.
Another investor warned of the risks of overlooking the world’s second-largest economy, despite its current woes.
“You can never write it off,” Archana Parekh, head of Asia equities ex-Japan at Balyasny Asset Management, told the panel. “Policymakers are aware of the extent of the challenges right now.”
–With assistance from Lulu Yilun Chen, Bei Hu, Yvonne Man, David Ingles, Zhang Dingmin, Haslinda Amin, Anand Menon, Joanne Wong and Joanna Ossinger.
(Updates with comment from OMERS executive in 12th paragraph)
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