The world could be facing its worst recession in 30 years, said Deputy Chairman and Executive Director of the Government of Singapore Investment Corp (GIC) Dr Tony Tan.
He shared this view with over 500 GIC staff at a conference on Monday.
Government of Singapore Investment Corporation"The financial contagion has now spread beyond US shores, increasing the likelihood of a global financial crisis and recession. We could be facing a recession which is longer, deeper and wider than any recession that we have encountered in the last 30 years," he said.
Dr Tan added that this could be mitigated if timely actions are taken by policymakers around the world, boosting both markets and investor sentiment.
If this does not happen within the next three to four months, it will be up to the markets to work out current problems, and this is expected to be a long, painful and drawn-out process.
He said: "What is clear is that the financial and investment markets will be extremely nervous and volatile over the next one or two years."
While that means GIC's multi-billion-dollar investments in UBS and Citigroup remain shaky in the short term, Dr Tan pointed out that these are long-term investments and they are expected to give good returns when markets stabilise and economic conditions return to normal levels.
GIC invested US$10.8 billion in UBS in December last year and US$6.88 billion in Citigroup this January.
At the staff conference, GIC also unveiled three new group committees – the Group Management Committee, the Group Investment Committee, and the Group Risk Committee.
The Group Management Committee, chaired by GIC's Group Managing Director Lim Siong Guan, will address and discuss organisational issues of the group.
The Group Investment Committee will be chaired by Group Chief Investment Officer Ng Kok Song. It will develop and implement asset allocation policies and investment strategies at the group level. It will also review risk and performance of asset classes regularly.
Chief Risk Officer Sung Cheng Chih will chair the Group Risk Committee which will oversee and guide the development and implementation of risk management policies.
These committees will report to an executive committee chaired by Dr Tan.
"This management structure enables GIC to have the group-wide oversight on our business operations, investments and risks while giving sufficient autonomy to our investment subsidiaries so that they can respond in a timely fashion to changes in investment circumstances," said Dr Tan.
Analysts said this is a natural move as companies around the world brace themselves for a rocky ride ahead.
GIC's investments are closely watched as the fund is seen as one of the largest sovereign wealth funds in the world.
It is estimated to have some US$330 billion in assets under management, behind Abu Dhabi Investment Authority and Norway's Government Pension Fund. - CNA/so
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