GIC says China policy on Big Tech has become clearer

GIC chief investment officer Jeffrey Jaensubhakij during a panel session at the World Economic Forum in Davos, Switzerland, on Jan 19, 2023. BLOOMBERG

DAVOS – The regulatory uncertainty caused by years of Chinese government crackdowns on the country’s technology giants has started to clear, potentially easing the way for wary investors, according to Singapore’s sovereign wealth fund GIC.

“So in Chinese tech – Big Tech – that picture has become clearer,” GIC chief investment officer Jeffrey Jaensubhakij said on a panel at the World Economic Forum in Davos, referring to recent comments by Chinese Vice-Premier Liu He.

“Part of what Liu He was saying yesterday is that they have kind of solved all of that now,” he added.

The comments on Thursday came as the world’s biggest investors try to rapidly switch gears on investing in one of the world’s biggest economies.

In the past five years, China has swung from being a huge source of profit for many firms to becoming nearly uninvestable amid heavy government interventions and pandemic restrictions. Now, it is seeking to jump-start its economy and has pledged to engage with the world while welcoming investors.

For General Atlantic chief executive officer William Ford, China was always too big and innovative to ignore. The firm tended to avoid areas like financial services and the media, but as geopolitical risks rose, it shifted its strategy to backing businesses that served the domestic market in areas like healthcare, consumer and retail.

Washington State Investment Board CEO Allyson Tucker said that decoupling China from the United States was not realistic as Chinese manufacturers are major producers of basic components. Even so, the risk of political friction between the two superpowers remains a key issue for the firm, which managed US$175.5 billion (S$232 billion) as at September.

“I happen to believe the US-China rivalry will be one of the dominant themes of our times,” Ms Tucker said. “As a global investor, we have to think about whether or not we continue to be allowed to invest in China. Right now, we have exposure in every single one of our asset classes. It used to be a much larger part of our portfolio than it is today.”

Beyond China – amid rising interest rates, high inflation and the ongoing threat of global recessions – many of the panellists expressed interest in basic commodities. GIC is confident that real estate offers continued opportunities, while Ms Tucker said commodities have historically been under-invested, especially in her home market.

Mr Marcos Troyjo, president of the New Development Bank, said: “Water and food are, perhaps, the single most important investment opportunities even from the perspective of infrastructure in the world today.”

He added that a major increase in global consumption would also require water.

But both Dr Jaensubhakij and Ms Tucker warned that investments in water were difficult for political and commercial reasons.

“It is not something the markets can solve very easily because water is not priced by the markets – it is municipal,” Dr Jaensubhakij said. “There is a real public policy crisis around water, and therefore food security, that I hope we all address quickly.” BLOOMBERG

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