GIC has `target list' of stocks to buy with trade war swings

 Singapore sovereign wealth fund GIC Pte Ltd. (PHOTO: REUTERS/Darren Whiteside)

By Linus Chua

(Bloomberg) — The outcome of the U.S.-China trade war may be one of the biggest catalysts for market swings, but GIC Pte isn’t counting on fast trades to ride that volatility. Instead, it’s armed itself with a shopping list — companies it wants to invest in when those swings push prices to an attractive level.

“We have a target list,” said Lim Chow Kiat, chief executive officer of Singapore’s sovereign wealth fund, declining to identify the companies. “If the market gives us the opportunity, we will just act accordingly. We don’t make short-term calls.”

Senior U.S. and Chinese officials will schedule two more rounds of face-to-face trade talks in an effort to reach a deal that U.S. President Donald Trump and his Chinese counterpart Xi Jinping could possibly sign by late May, a person familiar with the plans said. On April 4, Trump said it might take four weeks to put together a framework for the deal and two weeks more to get the details on paper.

The U.S. is GIC’s biggest investment market, making up about a third of its portfolio. The fund has been concerned about the prospects for sustained economic growth in the U.S. for the past two to three years, Lim said in an interview on Thursday in San Francisco, where the fund hosted a tech conference. While Trump’s tax cut has helped drive expansion, that needs to flow through to the performance of companies as well, Lim said.

“Long term, what counts is whether U.S. corporates are able to deliver good earnings growth, whether the macro variables like inflation remain well-behaved, which allows the Fed to keep interest rates low, and whether the economic cycle, which has been quite long in its tooth, can continue,” Lim said. “There are a lot of uncertainties around these factors.”

The IMF cited trade tensions as a risk earlier this month as it cut its outlook for global growth to the lowest since the financial crisis a decade ago.

GIC is the world’s seventh-largest sovereign wealth fund, managing $390 billion, according to research company SWFI. The Singapore fund will only say it manages more than $100 billion.

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