GIC believes in US’ long-term potential; mutual trust has enabled sovereign wealth fund and US partners to prosper: SM Lee

SINGAPORE: The mutual trust and confidence between GIC and its partners in the United States has enabled both sides to prosper together, and the Singapore sovereign wealth fund continues to believe in the long-term potential of the US economy, said Senior Minister Lee Hsien Loong on Wednesday (Nov 13).
“The US continues to be the most major, dynamic and resilient economy in the world,” said Mr Lee, who is chairman of GIC’s board of directors, in a keynote address at this year’s GIC Insights gala dinner in New York.
“It remains the destination of choice for talented and enterprising people from all over the globe.
“Its capital markets remain the most innovative and the most open in the world.”
Mr Lee noted in his speech that 2024 marks the 40th anniversary of GIC’s first foray into the US as a major investor, and he said that its partnership with the US has “grown from strength to strength”.
“For this, we are grateful to our US partners and fund managers, many of whom we have enjoyed long relationships with, and quite a few of whom are here with us in this room tonight,” he said.
“The mutual trust and confidence that we established enabled us to prosper together.”
During his speech, Mr Lee said that GIC continues to see investment opportunities in the US, especially in emerging areas like climate technology and sustainability.
Not only do such investments help to decarbonise the global economy, they can also benefit local communities, he added.
He gave two examples of GIC portfolio companies that are already working in this space.
“One is building a battery plant in West Virginia, on the site of an old steel mill, to manufacture iron-air batteries that provide long-duration energy storage. The plant will create hundreds of jobs in the local community,” he said.
“Another firm is working with school districts across the US to electrify school transportation. It recently announced the first 100 per cent electric school bus fleet in the US in Oakland, California.”
Mr Lee also reflected on how GIC has “stayed invested in the US through thick and thin”.
“GIC’s decades of investing in US markets have not always been smooth sailing,” he said.
“We weathered many peaks and troughs, and stayed invested in rough times.
“We grew together during the booms, and remained a steadfast and responsible investor during more trying and volatile periods.”
Mr Lee recalled the “Black Monday” stock market crash of Oct 19, 1987, the dot-com bubble cycle, the 2008 global financial crisis, and the COVID-19 pandemic as times during GIC’s four decades in the US where it “weathered the storm”.
GIC has been able to do this because it is able to take a long-term view, he said.
“We know that markets go through cycles – that is an unavoidable reality, which we must accept and ride through with some equanimity, if we are to maximise long-term returns,” he added
“This is a very different mindset from other market players, many of whom have shorter time horizons. They too, aim to invest in something promising, but with a clear exit strategy defined upfront, to liquidate and distribute the profits by a target sunset date.”
For GIC, however, there is “no predetermined end date”.
“We can hunker down and stay invested through boom-and-bust cycles, because GIC’s investment horizon is not measured in just years or even decades, but by fundamentals and intrinsic value,” he said.
“This ability to hold is a great source of strength – not just for GIC itself, but also for the portfolio companies that it invests in.
“Of course, there will be times when investments turn sour, but we take it in our stride. GIC, and importantly its client, understands that there is no upside without risk.”
Mr Lee then referenced the book Dow at 36,000, which was published in 1999, noting how GIC had been in the US well before then and continues to be invested with the Dow Jones Industrial Average now near the 44,000 mark.
“We have stayed here in the US throughout 40 very successful years of partnership, whether the market moved up, down, or sideways,” he said.
“We have greatly benefited from the power of long-term compounding,” he added.
“So I am confident that GIC will continue to be a patient investor in the US for a long time to come.”