GIC, Temasek have taken steps to cushion Covid-19 impact but will also seek future opportunities: President Halimah Yacob

SINGAPORE – Both GIC and Temasek have taken steps to cushion themselves from the impact of Covid-19 but will continue to position themselves for future opportunities, said President Halimah Yacob.

In a Facebook post on Thursday (Sept 24), Madam Halimah said she had received a briefing by Singapore sovereign wealth fund GIC and investment company Temasek Holdings on the investment outlook.

“Both GIC and Temasek invest our reserves, so it is important that I am periodically briefed on their global economic outlook, investment strategies and performance.

“More so for this year’s briefings, given the impact of the ongoing pandemic on their investments,” she added.

Temasek’s net portfolio was valued at $306 billion as at March 31, 2020, 2.2 per cent lower than last year’s record $313 billion, it said in its annual review on Sept 8.

In her post, Madam Halimah noted that Covid-19 has fundamentally changed the world with many investors taking a hit. Singapore’s investment entities were no different.

But both GIC and Temasek have taken steps to cushion the impact, she added.

“More importantly, as everyone adjusts to a new post Covid-19 world and a reshuffling of the demand and supply chains, it is important that GIC and Temasek continue to position themselves for future opportunities.”

Madam Halimah said she receives updates regularly, at least twice a year, with this year’s meeting held virtually.

The annual briefings, she added, are useful for her to engage both entities on their market outlook, which is a main factor in their projection of expected long-term returns.

“So it is imperative that in thinking about the estimates of the long-term expected returns, careful attention is paid to how structural and secular trends could affect the reserves and NIRC,” she said.

The NIRC comprises 50 per cent of the net investment returns on net assets invested by the Monetary Authority of Singapore, GIC, and Temasek – the three entities tasked with managing and investing the reserves – and 50 per cent of the net investment income derived from past reserves from the remaining assets.

The NIRC is the top contributor to government coffers.

Under the Net Investment Returns (NIR) framework, the Government can spend up to 50 per cent of the long-term expected real returns, including capital gains, on the relevant assets.

Expected, instead of actual, rates of return are used to provide some smoothness over the years in the amount of NIR that can be spent.

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