The head of GIC reiterates his point that markets are becoming increasingly dreadful and investors face a very uncertain future.
Lim Chow Kiat, the chief executive officer of Singapore’s GIC, sounded the alarm about the state of the world’s economy for the second time, attributing the state of affairs to populism, trade protectionism and a decline in the options for governments to deliver broad-based prosperity.
«(Investors) face rising uncertainty but falling returns. By some measures, uncertainty about economic prospects is currently highest on record. Further, policymakers seem to have limited ammunition to reflate economies,» Lim said at the GIC Insights event held on Thursday.
Returns Could Be Lower
In March, Lim said that GIC was concerned about the high uncertainty in the global investment environment. Then in July 2018, he warned returns would be lower in coming years due to the escalation of trade disputes.
Despite the uncertain environment, investors have been moving into riskier assets for fear of missing out gains. This is especially so against a backdrop of some $17 trillion of negative-yielding bonds.
Navigating On Troubled Waters
One strategy to navigate this troubling period is to increase cash reserves, Lim suggested. «When faced with uncertainties, it is advisable to have optionality. Tactically, that may be raising some cash as dry powder,» he told the audience.
GIC is the world’s sixth-biggest sovereign wealth fund, with an estimated $440 billion in assets under management, according to the Sovereign Wealth Fund Institute.
