Q: given Singapore’s oversized reserve, does Singapore’s investment/asset-mgmt talent pool have adequate calibre?
A: I think MAS and GIC allocte large portions to external managers with specific expertise, and manage the allocation with control, periodic reviews and rebalancing. I feel China government is less likely to do that. (On a footnote, Temasek is somewhat differnet. It owns stakes in many government-linked companies.)
In contrast, Private money AUM in Singapore was about SGD 5T as in Singapore assets under management up 10% to $5.4 trillion in 2023; new debt issues rise 21% | The Straits Times
— based on Ravi Menon: How Singapore manages its reserves (bis.org)
Singapore’s reserves are held and managed in three distinct pots: the MAS, GIC, and Temasek.
MAS manages the OFR [official foreign reserve, SGD 500b as of mid 2024]. MAS is the most conservative of the three investment entities, with the OFR invested mainly in safe and liquid assets. Probably low-return. Out of the 3 pots, I guess only MAS fund can help defend the Singapore dollar, due to liquidity.
The GIC (well over USD 100b, possibly many times bigger) is a sovereign fund manager, managing the government’s foreign assets. These assets are separate from the OFR. At GIC’s inception, part of the OFR was transferred from MAS to GIC, which was tasked to invest the reserves in a globally diversified portfolio of asset classes with a higher risk profile to deliver good long-term returns. GIC’s annual (dividend?) return contributes to the revenue of the government.
Temasek (SGD 400b in Nov 2022) is another state-owned equity investor. More than a quarter of Temasek’s portfolio is invested in Singapore, with the rest invested in 1) Asia and 2) global markets. Compared to MAS and GIC, Temasek is further out on the risk-return spectrum. I suspect that Temasek doesn’t have a statutory duty to pay annual dividends to share holder (i.e. the SG government). Such an obligation would limit the level of risk capital in the fund.
— Temasek 2022 .. based on https://www.channelnewsasia.com/business/temasek-holdings-net-portfolio-value-crosses-400-billion-first-time-annual-review-2803921
- 63% in Asia
- 27% in SG
- 22% in China .. #2 country allocation
- — by sector
- #1 sector: 23% financial services
- #2 sector: 18% telecommunications, media and technology
- #3 sector is transportation and industrials (energy and resources)
Unlisted securities (52%) registered 16% IRR over 20Y. These are often the most risky, unestablished businesses.
— CPF money and GIC.. demystified and clarified in every S’pore dollar is backed by hard asset #ownership.