Government of Singapore Investment Corp., manager of more than $100 billion of reserves, said real estate and private equity in emerging economies will present more rewarding opportunities than equity markets.

 

“While publicly listed equities is likely to remain GIC’s main implementation vehicle for our emerging market strategy, our view is that the private markets such as real estate and private equities will present even more rewarding opportunities,” GIC’s Chief Investment Officer Ng Kok Song said at a private wealth management conference in Singapore today.

 

GIC said in its annual report on Sept. 27 that it will continue to boost investments in higher-growth emerging economies, especially in Asia, as expansion in developed nations slows. The fund aims to increase the proportion of investments in public equities and private assets in emerging markets to the “high teens” over time from 12% to 13% at the end of March, Ng said on the sidelines of the event.

 

GIC, ranked the world’s sixth-largest state investment company by Sovereign Wealth Fund Institute in California, expects global gross domestic product growth to reach 3.8% this year, with advanced economies expanding 2.4% and emerging Asia growing 8%, Ng said.

 

The fund sees Asia contributing half of global growth this year, while accounting for 34% of total GDP. China is expected to contribute 26% to global growth, he said.

 

“Since World War II, no other country except China has changed the landscape of global growth that quickly,” Ng said. “Without doubt, we are witnessing a shift in economic influence of seismic proportions.”

Growth in Asia is outpacing the rest of the world, prompting policy makers to raise interest rates ahead of their counterparts in the U.S. and Europe to fight inflation and curb asset price bubbles.

 

The Asian Development Bank raised its 2010 growth forecast for the region, excluding Japan, to 8.2%, from 7.5%, while maintaining its 2011 growth estimate at 7.3%, the Manila-based lender said in a report yesterday.

 

Ng said GIC plans to hold on to its stakes in Citigroup Inc. and UBS AG because “the worst is over” for the banks, they have returned to profitability, they have strong capital ratios and will do well amid the changing regulatory environment.

 

“Banks globally will undergo a period of uncertainty because of the regulatory changes that are taking place,” he said. “We expect that both banks will come out quite well.”

 

GIC bought its stakes in Citigroup and UBS in 2008 as the collapse in the U.S. subprime-mortgage market in 2007 froze credit markets and led to about $1.8 trillion in losses and writedowns at financial institutions worldwide.

 

GIC, established in 1981, said annual returns in the past 20 years averaged 7.1% in U.S. dollar terms, compared with 5.7% in the previous fiscal year. The rate of return in excess of global inflation rose to 3.8% from 2.6%. GIC didn’t give the value of its assets or how much they rose or fell.

 

GIC’s holdings of developed market equities rose to 41% of its portfolio as of March 31 from 28% a year earlier, according to its annual report.

 

The fund repurchased shares of companies in developed markets starting in early 2009, after selling them from July 2007 to September 2008 because it was concerned about the overvaluation of risk assets, according to the report.

 

Its allocation to alternative investments -- including real estate, private equity, infrastructure and natural resources -- fell to 25% from 30%.

 

Investments in fixed income and cash fell to 24% from 32% as funds were used for the purchase of equities, according to the report.