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Sep 07, 2018

Emerging markets hold potential despite instability, says Singapore’s GIC

Lim Chow Kiat focuses on tech disruptors at Bloomberg forum

Despite ongoing signs of volatility within emerging markets, buying potential is strong, especially for technology companies that deliver on customer experience, according to Lim Chow Kiat, head of Singapore sovereign wealth fund (SWF) GIC. 

Instability within emerging markets has grown recently, with the MSCI Emerging Market Index closing down more than 20 percent from its January high yesterday, crossing the bear market threshold. 

Speaking last week at Bloomberg’s Sooner Than You Think forum in Singapore, where top city leaders and global technology executives shared their insights, Lim’s optimistic views offered a sense of hope for emerging markets.

Discussing the current situation in the region during a Q&A session at the forum, Bloomberg quotes Lim as saying: ‘As a long-term investor, we are not too perturbed. In some markets it will give us opportunities, as well, in some companies or stocks or even bonds we like to buy. But the valuations were a bit stretched. Perhaps now is a better time.’ 

Lim continues in a transcript posted to the GIC website after the event: ‘Emerging markets are currently going through a bit of turmoil, especially in the financial markets. But technology disruptions can be even more powerful in developing or emerging economies. There are even more unmet needs and undiscovered needs. In fact, their populations tend to be younger, and they take to technology in some ways faster and better. So a well-funded disruptor has many leap-frogging opportunities.’

Lim also delivered a strong message that focusing on customer values is key to the success of any tech company seeking to secure emerging market investors, observing: ‘Business enterprises ultimately succeed or fail on whether they deliver customer value. A relentless focus on delivering better customer value is the hallmark of every successful technology company.’ 

Giving an insight into GIC’s investor view, Lim added: ‘As investors, we look for commercialization of the technologies that best solve these pain points, whether they exist in old or new economy companies. We look for ecosystem companies that are aligned with societal interests.’ This is especially so in emerging markets, he said.

Established in 1981, GIC is one of the biggest SWFs today, with the London-based Sovereign Wealth Center estimating its assets at $398 bn. Its larger tech investments include Alibaba and smartphone maker Xiaomi Corp.