GIC Sees Opportunities in China, Other Emerging Markets: Q&A

(Bloomberg) -- Singapore’s state fund GIC Pte. has grown cautious on the global economy and is predicting lower investment returns in coming years. Still, executives are seeing some opportunities in the emerging markets including China. Here are some places where they see potential to invest:

Lim Chow Kiat, chief executive officer:

On emerging markets: One way to look at it is to look at which markets are going through periods of volatility or difficulties. If you look at that, emerging markets would be a place to look for such potential opportunities. We have been in emerging markets for a long time, so that is an important area for us and I would say that there are opportunities in there.

Jeffrey Jaensubhakij, group chief investment officer

On China equities: Whatever has sold off the most has the most opportunity. China is an important market for us. If you think about it sort of 20 years out, it’s such a small part of the global listed benchmark right now. Is it likely to be much larger? Absolutely.

On picking Chinese stocks: The combination of potential growth as well as considerable transformation means that if you can find and pick the right companies and industries, it should be tremendous market-cap expansion for those. It’s a worthwhile area of focus.

On the valuation of China A shares: From a valuation perspective, it’s actually quite reasonable. We have put in some capabilities in Shanghai to do our on-the-ground equity research about a year-and-a-half back. We’re hoping that as volatility comes, we’ll be in place, especially with the research capabilities, to go and look for them.

On the China A-share market: The A-share market is one of those where foreign participation isn’t in the indices, or just starting to get into the indices. Foreign participation has been low and should rise. To the extent that there are some China champions within there, as foreign investors come to take a look at it, it will get more attention.

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