The regulatory uncertainty caused by years of Chinese government crackdowns on the country’s technology giants has started to clear, potentially easing the way for wary investors, according to Singapore’s sovereign wealth fund.
(Bloomberg) — The regulatory uncertainty caused by years of Chinese government crackdowns on the country’s technology giants has started to clear, potentially easing the way for wary investors, according to Singapore’s sovereign wealth fund.
“So in Chinese tech – big tech – that picture has become clearer,” GIC Pte Chief Investment Officer Jeffrey Jaensubhakij said on a panel at the World Economic Forum in Davos, referring to recent comments by the Chinese Vice Premier. “Part of what Liu He was saying yesterday is that they’ve kind of solved all of that now.”
The comments Thursday come as the world’s biggest investors try to rapidly switch gears on investing in one of the world’s biggest economies. In the past five years, China has swung from being a huge source of profit for many firms to becoming nearly uninvestible amid heavy government interventions and pandemic restrictions. Now it’s seeking to jump-start its economy and pledged to engage with the world while welcoming investors.
Davos Latest: China Underscores Message of Cautious Optimism
For General Atlantic Chief Executive Officer William Ford, China was always too big and innovative to ignore. The firm tended to avoid areas like financial services and media but as geopolitical risks rose, it shifted its strategy to backing businesses that served the domestic market in areas like healthcare, consumer and retail.
Washington State Investment Board CEO Allyson Tucker added that decoupling China from the US wasn’t realistic since Chinese manufacturers are major producers of basic components. Even so, the risk of political friction between the two superpowers remains a key issue for the firm, which managed $175.5 billion as of September.
“I happen to believe the US-China rivalry will be one of the dominant themes of our times,” she said. “As a global investor we have to think about whether or not we continue to be allowed to invest in China. Right now we have exposure in every single one of our asset classes. It used to be a much larger part of our portfolio than it is today.”
Back to Basics
Beyond China – amid rising interest rates, high inflation and the ongoing threat of global recessions – many of the panelists expressed interest in basic commodities. GIC is confident that real estate offers continued opportunities while Tucker said commodities had historically been under-invested, especially in her home market.
“Water and food are perhaps the single most important investment opportunities even from the perspective of infrastructure in the world today,” said Marcos Troyjo, President of New Development Bank, adding that a major increase in global consumption would also require water.
Read how investment giants expect more market turmoil
But both Jaensubhakij and Tucker warned that investments in water were difficult for political and commercial reasons.
“It’s not something the markets can solve very easily because water isn’t priced by the markets – it’s municipal,” Jaensubhakij said. “There’s a real public policy crisis around water and therefore food security that I hope we all address quickly.”
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