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Government of Singapore Investment Corporation (GIC)

Definition

The Government of Singapore Investment Corporation (GIC) is a sovereign wealth fund established by the government of Singapore in 1981 to manage the country’s foreign reserves. Its aim is to achieve good long-term returns above global inflation and thus preserve and enhance Singapore’s reserves. As a global investment management company, GIC invests in a wide range of asset classes including equities, fixed income, real estate, and private equity.

Phonetic

The phonetics of the keyword “Government of Singapore Investment Corporation (GIC)” can be transcribed as following:Government – /ˈɡʌvərnmənt/of – /ʌv/ or /əv/Singapore – /ˌsɪŋəˈpɔːr/Investment – /ɪnˈvɛstmənt/Corporation – /ˌkɔːrpəˈreɪʃən/GIC – /dʒiː aɪ siː/

Key Takeaways

  1. The Government of Singapore Investment Corporation (GIC) is a sovereign wealth fund established by the Singapore government in 1981. Its primary goal is to manage Singapore’s foreign reserves with a long term perspective.
  2. The GIC is known for its professionalism and disciplined investment approach, which has led to its success. It has a global investment portfolio spread across over 40 countries. The portfolio includes investments in broad range of asset classes such as real estate, private equity, equities and fixed income.
  3. The GIC is also characterized by its commitment to ethical governance and sustainability. It is a signatory of the United Nations’ Principles for Responsible Investment, which underscores its commitment to sustainable investment practices that generate long-term returns.

Importance

The Government of Singapore Investment Corporation (GIC) is a critical entity for multiple reasons. As one of the world’s largest sovereign wealth funds, it serves as the chief investment arm of the Singaporean government and is tasked with managing Singapore’s foreign reserves. This is a crucial role in safeguarding the financial health of the nation, contributing to the stability of the Singaporean economy. Besides its national role, GIC has an international impact due to its significant and diversified investments in numerous categories, including real estate, equities, fixed income, and other alternative assets worldwide. Therefore, its investment strategies and decisions often influence global markets, making GIC of significance in international business and finance.

Explanation

The Government of Singapore Investment Corporation (GIC) is a sovereign wealth fund established by the government of Singapore in 1981. The fundamental purpose of GIC is to manage the foreign reserves of Singapore in a bid to achieve good, long-term returns, well over a period of 20 years and more. The fund is mandated to preserve and enhance Singapore’s foreign reserves, ensuring the country’s economic stability and future growth.GIC invests across a broad range of assets classes, from equities to real estate, private equity and fixed income assets in over 40 countries worldwide. By diversifying its investments on an enormous scale, GIC seeks to reduce risk and provide sustainable returns. The payout from GIC contributes to the Singapore government’s budget, helping to fund public programs and services thereby making a significant contribution to the nation’s economy. Therefore, GIC’s comprehensive investment strategy serves a critical purpose: to secure Singapore’s financial future.

Examples

1. Investment in Dexus Australian Logistics Trust: In 2020, GIC formed a partnership with Dexus, one of Australia’s leading real estate groups, committed to invest in advanced and high-quality logistics properties across Australia. This was a strategic move for GIC to broaden its investments in the stable property sector while taking advantage of the growing e-commerce industry in Australia.2. Acquisition of Stake in CitizenM: Known for around-the-world investments, the GIC made headlines in 2018 when it acquired a 25% stake in CitizenM, a Dutch hotel group. The transaction valued CitizenM at $2.3 billion and further diversified GIC’s global investment portfolio.3. Investment in Broadband Companies in the Philippines: GIC, along with KKR, a global investment firm, entered into an agreement with Converge, a broadband service provider in the Philippines, in 2020 to invest up to $700 million. This investment would support the growth and development of the digital economy and infrastructure in the Philippines, showcasing GIC’s commitment to invest in emerging markets.

Frequently Asked Questions(FAQ)

What is the Government of Singapore Investment Corporation (GIC)?

The Government of Singapore Investment Corporation (GIC) is a sovereign wealth fund established by the Government of Singapore in 1981 to manage Singapore’s foreign reserves. It invests internationally in a wide range of asset classes including real estate, equities, fixed income, and private equity.

When was the GIC established?

The GIC was established in the year 1981.

Who owns the GIC?

The GIC is owned by the Government of Singapore.

What is the objective of GIC?

The primary objective of GIC is to manage Singapore’s foreign reserves with the aim to achieve good long-term returns above global inflation.

What types of investments does GIC make?

GIC invests across a wide range of asset classes that include equities, fixed income, real estate, private equity, and infrastructure.

How is GIC different from Temasek Holdings?

While both are sovereign wealth funds owned by the Singapore government, they have different investment strategies. GIC typically makes overseas investments and is focused on achieving long-term objective to preserve the purchasing power of the reserves. On the other hand, Temasek Holdings focuses primarily on investing in companies and assets located in Singapore and the rest of Asia.

How does GIC contribute to Singapore’s economy?

GIC helps to manage the nation’s foreign reserves, aiming to secure Singapore’s financial future. By investing Singapore’s reserves in a diverse portfolio, GIC helps to mitigate risks and secure long-term returns, contributing to the nation’s economic stability and growth.

Where does GIC invest?

GIC invests globally with investments spread across more than 40 countries worldwide.

Is the GIC’s operation transparent to the public?

The GIC complies with the Santiago Principles commonly known as the Generally Accepted Principles and Practices (GAPP) to maintain a certain degree of transparency, but it does not disclose detailed information about its investments for strategic reasons.

Related Finance Terms

  • Sovereign Wealth Fund
  • Long-term Investments
  • Government Financial Strategy
  • Financial Markets
  • Asset Diversification

Sources for More Information

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