ECONOMISTS at the Government of Singapore Investment Corp (GIC) are upbeat about global economic growth this year - especially for Asia. They believe global growth will average 3.8 per cent, as advanced economies advance a more modest 2.4 per cent. However, emerging Asia will lead the world, charging ahead by a much faster 8 per cent, economists at the sovereign wealth fund expect.
The forecasts were outlined by GIC group chief investment officer Ng Kok Song, speaking at a conference on private wealth management on Wednesday. GIC sees more rewarding emerging market opportunities in private asset classes including real estate and private equities, he said.
Publicly listed equities, however, are 'likely to remain GIC's main implementation vehicle for our emerging markets' strategy', he said at the conference organised by the CFA Institute and held at the Raffles City Convention Centre.
According to Bloomberg, Mr Ng said on the sidelines of the event that GIC aims to lift the proportion of investments in public equities and private assets in emerging markets from about 12 to 13 per cent at the end of March this year to the 'high teens' over time. As at March 31, GIC's exposure to emerging market public equities was 10 per cent or one-fifth of its global public equity holdings.
GIC's economists expect Asia to contribute 50 per cent of global growth this year, even though its share of global economic output is 34 per cent, said Mr Ng. China's contribution to global growth will be 26 per cent, he said, and India's, 10 per cent. 'Without doubt, we are witnessing a shift in economic influence of seismic proportions,' he said.
GIC's strategy to focus more on emerging markets strategy was announced earlier this week when the fund released its annual report which showed the 20-year nominal annual rate of return in US dollar terms jumped from 5.7 per cent to 7.1 per cent for the 12 months to March 31.