SINGAPORE: Singapore will continue to find ways to improve the attractiveness of Singapore’s equity market, but it will not direct sovereign wealth fund GIC to invest in locally listed companies, says Second Finance Minister Chee Hong Tat.

He was responding to a question in Parliament on Tuesday by Liang Eng Hwa (Bukit Panjang) on whether the government would review its investment mandates with GIC, and consider suggestions from some industry players to allocate part of GIC’s investments to securities listed on the Singapore Exchange (SGX).

Chee said: “GIC must continue to make professional investment decisions, and the government should not direct or interfere with GIC’s investment decisions.”

He noted that the mandate of GIC is to preserve and enhance the international purchasing power of Singapore’s reserves. This means that GIC must make investment decisions that aim to achieve good long-term returns for Singapore.

GIC also has to invest in a globally diversified portfolio to preserve the international purchasing power of the reserves, Chee said. This portfolio will have to reflect the availability and attractiveness of global investment opportunities and asset classes.

He added that getting the government to direct GIC to invest in locally listed firms is not the solution.

“Doing so will compromise our objectives for setting up GIC, which is not beneficial for Singapore and Singaporeans. Under our current arrangements, GIC can already invest in appropriate Singapore companies if these companies have a global footprint and generate good returns to GIC’s portfolio,” Chee said.

A more sustainable way to develop the local equity market is to first have a pipeline of good companies to list on SGX, he said.

“In addition to anchoring international enterprises which bring new ideas, technology and good jobs, we will continue to groom and develop local companies. Some of these companies will have the potential to list locally,” he said.

In 2022, the government set up funds to support growth companies and prepare them for initial public offerings here, such as the Anchor Fund @ 65.

Such funds have invested in nine companies to date, and they are working closely with the portfolio companies to prepare them for listing on the SGX, he added.

“Another priority is to help more companies which are listed on the SGX to grow their operations and expand into overseas markets. By becoming globally competitive and having a larger international presence, these companies would become more attractive to global investors,” Chee noted.

“We have implemented schemes to support business innovation, transformation and internationalisation, to help Singapore-based companies develop their capabilities.”

 - ANN