Singapore will not direct GIC to invest in locally listed companies: Chee Hong Tat

SINGAPORE - Singapore will continue to find ways to improve the attractiveness of Singapore’s equity market, but it will not direct sovereign wealth fund GIC to invest in locally listed companies, said Second Minister for Finance Chee Hong Tat on July 2.

He was responding to a question in Parliament by Mr Liang Eng Hwa (Bukit Panjang) on whether the Government would review its investment mandates with GIC, and consider suggestions from some industry players to allocate part of GIC’s investments to securities listed on the Singapore Exchange (SGX).

Mr Chee said: “GIC must... continue to make professional investment decisions, and the Government should not direct or interfere with GIC’s investment decisions.”

He noted that the mandate of GIC is to preserve and enhance the international purchasing power of Singapore’s reserves. This means that GIC must make investment decisions that aim to achieve good long-term returns for Singapore.

GIC also has to invest in a globally diversified portfolio to preserve the international purchasing power of the reserves, Mr Chee said. This portfolio will have to reflect the availability and attractiveness of global investment opportunities and asset classes.

He added that getting the Government to direct GIC to invest in locally listed firms is not the solution.

“Doing so will compromise our objectives for setting up GIC, which is not beneficial for Singapore and Singaporeans. Under our current arrangements, GIC can already invest in appropriate Singapore companies if these companies have a global footprint and generate good returns to GIC’s portfolio,” Mr Chee said.

A more sustainable way to develop the local equity market is to first have a pipeline of good companies to list on SGX, he said.

“In addition to anchoring international enterprises which bring new ideas, technology and good jobs, we will continue to groom and develop local companies. Some of these companies will have the potential to list locally,” he said.

In 2022, the Government set up funds to support growth companies and prepare them for initial public offerings (IPOs) here, such as the Anchor Fund @ 65.

Such funds have invested in nine companies to date, and they are working closely with the portfolio companies to prepare them for listing on the SGX, he added.

“Another priority is to help more companies which are listed on the SGX to grow their operations and expand into overseas markets. By becoming globally competitive and having a larger international presence, these companies would become more attractive to global investors,” Mr Chee noted.

“We have implemented schemes to support business innovation, transformation and internationalisation, to help Singapore-based companies develop their capabilities.”

Mr Chee also responded to supplementary questions from Mr Liang on how Singapore’s investment agencies can help to strengthen the country’s status as an international financial hub.

He noted that Singapore is already the largest foreign exchange centre in the Asia-Pacific, with almost US$1 trillion (S$1.36 trillion) in foreign exchange traded daily here. Singapore also has over 1,100 asset managers and over $4.9 trillion in assets under management.

“Having said that, we do recognise that for the local equity market, more can be done to grow this segment. We are working closely with the industry to look at what is the best way to do this,” he said.

Mr Chee added that the Government’s investment entities like Temasek and GIC do invest locally.

“But I think there’s a difference between asking them to make those investment decisions based on returns and what is in the best interest for shareholders – which are Singaporeans, ultimately – versus giving them a directive to invest locally,” he said.

He also emphasised that growing the local equity market is an important priority for the Government, in response to a question from Non-Constituency MP Leong Mun Wai on whether the issue is given priority.

Mr Chee said: “This is an important part of our overall economy. It will not only help to support our local companies who want to list and expand, it will also be an important contribution to our status as a financial centre.”