FirstFT: Singapore’s GIC scales back China investments

Singapore’s GIC, one of the world’s largest investors in private equity funds, has scaled back commitments to China-focused private equity and venture capital funds over the past year as it steps up scrutiny of risks in the world’s second-biggest economy.

The sovereign wealth fund has also significantly slowed the pace of its direct investments in private Chinese companies, five people with knowledge of the matter said. ITjuzi, a data provider which monitors investments in China, recorded just two such investments by GIC last year, down from 16 in 2021.

Although GIC was an early backer of China’s economic growth story, some of the fund’s most senior figures have struck a more cautious tone on investing in the country during internal discussions over the past year, two of the people said.

GIC’s investments in China, which it does not quantify, have been hit by the country’s property crisis and Beijing’s crackdown on its own tech companies. The fund has been a significant investor in Chinese real estate and owns a stake in Ant Group, whose planned $37bn initial public offering was halted by Chinese regulators in 2020.

Executives and senior managers are uneasy about growing geopolitical risk from souring US-China relations and are concerned that Chinese president Xi Jinping’s “common prosperity” drive to reduce economic inequality in the country could have unintended negative consequences.

Five more stories in the news

1. No evidence aerial objects were spying The US has said there is no evidence yet that three objects shot down over North America in recent days were conducting surveillance but added it could not rule out the possibility of espionage. The White House said the objects were at a considerably lower altitude than that of the Chinese balloon.

2. Ukraine’s allies pledge more ammo Western capitals will lay out additional pledges of ammunition and air defence equipment for Ukraine at a meeting today to bolster Kyiv’s forces, officials told the Financial Times. The gathering of allies coincides with a planned large-scale offensive by Moscow. Officials said the immediate needs trumped longer-term requests for fighter jets.

• Opinion: Professor John Mearsheimer’s argument blaming the west for the Ukraine war makes no sense, writes Gideon Rachman.

• Military briefing: President Volodymyr Zelenskyy is pressing for western weaponry as ammunition and spares for Soviet-era equipment dwindle.

3. Amazon plans to ‘go big’ on physical stores Chief executive Andy Jassy has vowed to back the company’s struggling grocery store business, despite recently announcing that its growth plans were on hold. Jassy told the Financial Times that the ecommerce giant was ready to “go big” on bricks-and-mortar stores, blaming the pandemic for a series of stumbles.

4. Shipping costs plunge as consumer spending dips The price of shipping goods on vital global trade routes has fallen 85 per cent below its peak as the cost of living crisis hits consumer spending and pandemic-related supply chain disruption eases. After two years of bumper profits, shipping groups are now warning investors of the risk to their bottom line.

5. France and Germany split over hydrogen rules New EU rules set out yesterday allow hydrogen derived from grids with high levels of nuclear power to be considered green if the producer buys a long-term contract for renewable energy equivalent to its consumption. The decision is a triumph for France but has intensified a long-running disagreement with Germany.

The day ahead

Economic data The EU releases flash gross domestic product and employment figures for the fourth quarter, while France has its unemployment rate for the same period. The UK publishes flash labour productivity estimates for the fourth quarter, as well as February labour market statistics and January insolvency figures for England and Wales.

US inflation The US releases its consumer price index for January. Economists expect inflation declined to 6.2 per cent, representing the smallest decrease in the annual rate since September and possibly emboldening officials at the Federal Reserve who want to raise rates more aggressively.

Oil report Opec publishes its oil market report.

Ecofin meet The EU’s Economic and Financial Affairs Council meets in Brussels, with sanctions on Russia on the agenda.

UK strikes Workers at 150 British universities start three days of industrial action over pay, work conditions and pension cuts.

Corporate results Airbnb, Carrefour, Carr’s Group, Coca-Cola Company, Marriott International, Norsk Hydro, Telecom Italia and ThyssenKrupp report.

What else we’re reading

Russia’s growing trade in arms, oil and African politics As Russia becomes increasingly isolated from Europe and the US, Africa has become an important foreign policy priority. Moscow is the biggest exporter of arms to the continent and has become a useful trading partner in goods ranging from diamonds to citrus fruit. Read the fourth part of our series on Russia in Africa.

Apple hits stumbling blocks in India The tech giant is under pressure to unwind its China-orientated supply chain strategy following disruptions during the pandemic, but the iPhone maker has struggled with quality control, worker efficiency, logistics, tariffs and infrastructure in its effort to increase production in India.

Turning offices into condos in New York A growing roster of New York City’s office towers are being rendered obsolete by remote working. For city officials, converting them to residential buildings is a “lemons-to-lemonade” way to chip away at a chronic housing shortage. But there are many reasons why conversions have been such a rarity, and why most developers have found easier ways to make money.

Global MBA Ranking 2023: change at the top The 25th edition of the annual Financial Times MBA rankings brings a new number one school and updated methodology. Andrew Jack, the FT’s global education editor, explains why after a quarter of a century it was time to take a new approach to the ranking.

Belfast shipyard that built the Titanic relaunches When John Wood, chief of London-based energy firm InfraStrata, bought Harland & Wolff out of receivership for £6mn three years ago, colleagues did not believe the shipyard could be brought back from the dead. But Wood believes a £1.6bn contract with the Royal Navy will now breathe new life into the 162-year-old Belfast company that built the Titanic.

Take a break from the news

What is the name of the fantasy-world setting for Tolkien’s The Lord of the Rings? Have a go at 15-across in our latest crossword puzzle.