Singapore plans to explore bolder investments of country's foreign reserves

The 87-year-old former prime minister said the GIC, known in the market for conservative investments, cannot keep following conventional practices as it grows.

“This could lead to mediocrity. GIC must develop the capacity and courage to make the right decisions, thinking in depth and foresight for what works best for us, even if the decisions are at times unconventional,” he said. Lee did not go into detail in a speech late Monday at the GIC's 30th anniversary celebrations.

The GIC is a company founded in 1981 to invest Singapore's foreign reserves, which stood at close to SG$300 billion (US$243 billion) in April, according to central bank estimates. The GIC periodically reviews the mix of its investments by assigning weights to different asset classes such as stocks, bonds, private equity and prime real estate across the world.

In its latest available annual report, the GIC said 41 percent of its portfolio as of March 2010 was in public equities in developed markets. Geographically, 36 percent of its assets were in the United States, 30 percent in Europe and 24 percent in Asia.

In September last year, the GIC said it had recovered most of its losses caused by the 2008 financial crisis and planned to keep its stakes in banking giants Citigroup and UBS. Singapore's other state investment arm is Temasek Holdings, whose portfolio of SG$186 billion is weighted toward Asia and Singapore.

“The vision to create GIC was original, bold and forward-looking,” Lee said in remarks carried by local media. “If it stays true to its original vision and values, it can continue to do well over the next 30 years,” he added.

He warned that the next three decades were fraught with challenges and uncertainty with the rise of emerging economies, which would change geopolitical dynamics and put pressure on resources and the environment.

The U.S.-based Sovereign Wealth Fund Institute in March ranked GIC as the eighth largest in the world.

The Singapore dollar was trading higher against the greenback at 1.2314 to the U.S. dollar around 0300 GMT, from 1.2321 in late Asian trade on Monday.

But analysts said this was due to a rebound in the euro and commodities markets from last week, as well as Singapore's ruling People's Action Party returning to power in the May 7 elections, rather than Lee's comments.

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