•GIC portfolio includes Alibaba, Ant, Meituan and JD Health
•GIC sees scope for property investments despite Covid-19 impact
(AF) Singapore sovereign wealth fund GIC, one of the world’s top 10 investors, is upbeat about China’s technology sector despite the country’s sweeping regulatory crackdown on homegrown giants from Didi Global to Ant Financial.
That’s because of its handling of the pandemic, its macroeconomic discipline, its agility to respond to economic weaknesses, and because the crackdown on tech companies is making the sector more sustainable, said Chief Executive Lim Chow Kiat.
“If we looked at a lot of these actions, we would say they help in making the industries, the companies, the business models more sustainable,” said Lim, who oversees assets under management at GIC of $550 billion, according to data platform Global SWF. “China continues to come out with innovative business models and technology, (so) our confidence in the sector, and clearly the country, remains positive.”
Since late last year, Beijing has moved quickly to rein in the giants of its so-called platform economy, which had taken advantage of an often-permissive regulatory environment to rapidly expand their businesses. The crackdown has impacted the sector’s shares, with the CSI Overseas China Internet index down 22% so far this year, underperforming broader indexes.
In its latest move, China’s cyberspace regulator launched a probe into ride-hailing giant Didi Global earlier this month, just days after Didi made its New York debut and raised $4.4 billion. Chinese regulators are considering serious, perhaps unprecedented, penalties for Didi Global, Bloomberg reported Thursday.
Regulators view the ride-hailing giant’s decision to go public in the US last month, despite pushback from the Cyberspace Administration of China, as a challenge to the government, the report said, citing people who asked not to be named.
Regulators are mulling punishments, including a fine, suspension of certain operations or the introduction of a state-owned investor, the report said. Another possibility is a forced delisting or withdrawal of Didi’s US shares, the Bloomberg report said, adding it was unclear how such an option would play out.
GIC’s China investment portfolio includes Alibaba and fintech affiliate Ant Group, food delivery firm Meituan, as well as real estate firm China Vanke and online healthcare platform JD Health International. In its latest move, China’s cyberspace regulator launched a probe into ride-hailing giant Didi Global earlier this month, just days after Didi raised $4.4 billion from an IPO in New York.
GIC saw its strongest annualised returns over a 20-year period in the year to March, driven by a global market rally. It reported an annualised 20-year real rate of return – its main performance gauge – of 4.3%, the highest since 2015, and up from a comparable 2.7% in 2020.
The share of emerging market equities in GIC’s portfolio rose to 17% in the latest year from 15% a year ago, while the share of private equity increased to 15% from 13%. Allocation to bonds and cash fell to 39% from a record 44% a year ago.
While the COVID-19 pandemic has had a lasting impact on the real estate sector, which makes up 8% of GIC’s portfolio, the fund still sees room to make investments, especially in markets that are still moving towards urbanisation, said Jeffrey Jaensubhakij, GIC’s group chief investment officer.