Where Firms With $3 Trillion Are Putting Their Money

Where Firms With $3 Trillion Are Putting Their Money

China’s regulatory crackdown is lending more unpredictability to the global markets, and a recent Bloomberg News article asked firms with $3 trillion in combined assets how they’re navigating the turmoil. While some are ratcheting up allocations to hedge funds, others are pivoting to undervalued stocks in Europe and India to stay out of the U.S.-China fray. But across the board, all the firms suggest more caution and predicted a tough recovery ahead.

Here’s a look at some of these firms’ strategies.

Temasek Holdings: $283 billion

Singapore’s state-owned investor plans to target companies with a focus on digitization, e-commerce, cyber-security and growing sustainability, seeking to make their investors’ portfolios greener. China accounts for 27% of its portfolio, and they plan to remain bullish there in the long term, expressing optimism that Chinese stocks will rise over time, even without access to U.S. markets.

GIC Pie: est. $545 billion

This sovereign wealth fund, also in Singapore, remains positive on China as well, claiming their assets continue to offer good entry levels. The fund is paying close attention to geopolitical forces and is looking to technology and sustainability. GIC sees other exchanges in places like Singapore and Hong Kong as “vibrant” alternatives if China can’t list in America.

Future Fund: $144 billion

Due to the increasingly fraught relationship between Australia and China, this Australian sovereign wealth fund has pulled back from China. CEO Raphael Arndt believes that economic conditions are now ripe for a sustained inflation increase, and they are  readying their portfolios for that, planning to allocate stocks across value and quality-type strategies. The fund recently bought stakes in a wind farm operator and cellphone towers.

Pictet Wealth Management: $300 billion

Apply a higher risk premium and choose Hong Kong-listed options if possible, suggests this firm, which also believes that hedge funds are back in favor. Their CIO Cesar Perez Ruiz says he’s looking for picks that can weather the different stages of the pandemic recovery and to do that he’s skipping metrics like return on equity.

Norges Bank Investment Management: $1.3 trillion

Because of its huge size, this Norwegian sovereign investment vehicle has few options but to wait it out. China accounts for 5% of its allocations and regulatory concerns aren’t necessarily a reason to cut back there, pointing to tech companies as a positive business model that they still believe in.

China Renaissance: $8.8 billion

China Renaissance’s approach is to focus on growth-stage companies; looking at Chinese startups considered less susceptible to government scrutiny. They plan to invest in about 10 companies a year.

Lombard Odier (Private Bank): $347 billion

CIO Stephane Monier predicts banking, auto and energy stocks will perform well in the coming months. The bank remains bullish on China in the long term, and favors China-listed stocks that won’t have to contend with as much government intervention, pointing to banking, renewable energy, materials and industrial stocks, while cautioning against tech, property, education and health care.

DWS Asia Pacific: $55 billion

The time is ripe to invest in select Indian-listed IT service providers, says CIO Sean Taylor, who believes it could be at least a year before regulatory issues in China are figured out enough for investors to see clearly.