Last year, the global investment environment continued to fundamentally change.

Russia's invasion of Ukraine has not ended, and its life and economic losses have continued to increase.This war, together with the super loose macro policy of the main economy, ended the 40 -year low inflation trend.In order to suppress inflation, the central banks of major countries began to raise interest rates.At the same time, in the United States, the inflation reduction bills have accelerated energy transformation vigorously.In the past six months, generating artificial intelligence (AI) has spread unprecedented speed and scale, which has yet to be determined.At the end of last year, China suddenly ended a rigorous policies for the prevention and control of the crown disease, and the accident brought hope for this year's global economic growth.

For investors, 2022 is also a year of watershed.Based on US dollars, global bonds fell 16%, and stocks fell 18%, which constitutes a challenge for investment portfolio that relies on bonds to offset stock risks.For those companies with expected cash flow, the impact of valuations is particularly serious.At the same time, the financing conditions of the capital market tightened sharply, resulting in a sharp decline in investment transactions.

We have not got out of the predicament.Economy and market can still feel the consequences of policy tightening.Rising financing costs and potential loans will weaken the profitability of some banks.The housing market that depends on floating interest rate mortgage loans is also under pressure from refinancing.At the same time, under the intensification of competition in large powers, the pressure of globalization has continued to increase.In addition, climate change continues to intensify, and the occurrence of natural climate disasters will be more frequent.

Despite these challenges, the long -term performance of Singapore Government Investment Corporation (GIC) remain tough.As of March 31, 2023, in the 20 years since April 1, 2003, the annualized US dollar return rate of our investment portfolio was 6.9%.After global inflation adjustment, the actual return of 20 -year annualization was 4.6%, which was slightly increased from 4.2%last year.

Long -term tough investment returns are important for national finance.The annual net investment returns contribution (NIRC) -s a amount high from Singapore Financial Administration, GIC and Temasek Holdings -is an important source of income from government budgets.It is estimated that in the 2023 fiscal year, NIRC will reach 23.48 million yuan.

Age full of uncertainty

Last year, I emphasized the risk of continuous inflation and long -term geopolitics.Now they still exist.In addition, there are two new risks need to deal with.

First of all, a structural change in high interest rates may occur.Due to the dense interest rate hikes and continuous inflation last year, we may step into a "long high interest rate" situation.If the financial market or economic growth will no longer be hit in the future, we are likely to say goodbye to the era of zero interest rates.Although the increase in capital prices will benefit long -term investors, it is difficult for many companies and even countries to transition to high interest rates.Those business models depend on extremely low interest rates, they need to make significant or even painful adjustments.

It is unknown whether these companies can survive.

Followed by the impact of generating AI.Although AI has existed for many years, the recently -produced AI (including large language models) may have a disruptive effect, and it will also bring hidden dangers.The financial market is digesting this new trend, and more and more assets are re -priced.Although technology companies are the focus of attention at the moment, all companies soon need to adapt to this situation.AI can increase productivity and help suppress inflation, but also pose a threat to cyber security and social norms.Therefore, governments of various countries pay great attention to their development.

In order to cope with these uncertain factors, GIC adheres to our core investment principles, that is, to look at the long -term and decentralized risks, and more importantly, active preparations, rather than over -reliance on forecasts.In this turbulent era, making the investment portfolio more tough is the focus of our attention; we will continue to focus on finding assets with long -term stable returns.

This era has begun a few years ago.Investors are particularly worried about the return rate of general downturn, as well as uncertainty that continues to rise.In this regard, GIC has carried out the efforts to strengthen investment portfolio resistance early.We began to return to the market (Beta) and active (Alpha), and adopted a more fine way to adjust our investment risks.

One of the specific actions we take is to improve the liquidity of the investment portfolio.Although the valuation has declined in the past year, we remain cautious.We have also emphasized that focusing on assets with stable income to provide inflation protection.Finally, in order to cope with the transfer of supply chain, we gradually transfer capital to industries and countries that can benefit from it.

Infrastructure Assets

As part of the long -term work that achieves tough returns, GIC has been constantly accumulating infrastructure assets.In this report, our annual report specifically wrote a unique advantage brought by infrastructure assets to the GIC investment portfolio.The article explains the risks and income characteristics of these assets, as well as our investment process.

We have also made progress in the combination of sustainable development concepts with investment and corporate processes.Last year, we established the Central Sustainable Development Office to improve research and policy capabilities and support investment teams to achieve carbonization targets.As a long -term investor, we focus on the potential investment opportunities seizing in green transformation by a team of various asset categories.

In the public equity department, we establish a combination of climate change opportunities to use more capital to slow down climate change and promote climate adaptation investment; in the private equity department, we have established a sustainable development solution team to grasp early energy sources to grasp early energy sourcesInvestment opportunities for transition; in fixed income and diversified assets, we have established new transformation and sustainable financial teams.

The advantage of our employees and partnerships

Mr. Shang Damman, who has been Vice Chairman of GIC since 2019, resigned from the GIC board of directors on July 7, 2023.Since serving as the chairman of the Investment Strategy Committee in 2011, he has led GIC to overcome various challenges and changes in the turbulent international situation with a stable style, keen insight, and insistence on long -term performance.Mr. Huang Xuncai, Deputy Prime Minister and Minister of Finance and Director of GIC in Singapore, will take over as chairman of the Investment Strategy Committee from July 7, 2023.

In terms of company management, Mr. Sam Kim is appointed as the deputy chief operating officer of the group, while Mr. Goh Chin Kiong is commissioned as the deputy chief investor of the real estate department.These appointments have enhanced our leadership team.

Only by relying on the firm commitment and ability of employees can GIC complete the mission.We will continue to strive to improve team skills and promote diversification.At present, we are close to achieving the goal of women's positions by women.

GIC has benefited a lot from a widely -commercial partner network.Through many individuals and multi -party cooperation, including our flagship forums, such as GIC Insights, Partnership forum, and Bridge Forum, we have appreciated the partners and even invest in the industry.We have also contributed to the local community through projects such as GIC Sparks Smiles and GIC ’s Learning Journey.Recently, we have established a partnership with "Ray of Hope" to launch a donation pairing platform for employees to support grass -roots community groups and help more disadvantaged communities.

In this turbulent world, investors face many challenges and opportunities.GIC will continue to work hard to adhere to our values and investment principles.The most important thing is that we will continue to work to achieve the goal of ensuring the future of Singapore's finance.<<<

The author is CEO of Singapore Government Investment Company