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Singapore’s GIC sees AI as transformative but will tread cautiously amid the hype

SINGAPORE – State investor GIC is treading carefully around the phenomenon of artificial intelligence (AI), but will stay focused on investment opportunities in companies that may benefit the most from the new technology.

Chief executive Lim Chow Kiat said that there is always some hype around new and transformative technologies, and AI is no exception.

He told the Milken Institute’s 10th Asia Summit at the Four Seasons Hotel in Singapore on Wednesday: “AI is, in our view, very important and has huge potential for transformation of all industries and everything we do. But the technology is still at an early stage in terms of its translation into business models and outcomes.

“So, in that sense, we are a bit wary of some of the kind of short-term valuations in some of the early-stage start-ups, some of the new models.

“We would be very cautious in deploying capital… given the valuations and the lack of a real business model.”

Investors worldwide are rushing to invest in the next big opportunity in AI since the launch of chatbot ChatGPT late last year.

More recently, chipmaker Nvidia reported blockbuster financial results that sent its share price rallying by more than 100 per cent in a matter of days.

However, experts have warned investors against chasing the AI boom, advising them to invest only in companies that have credible strategies.

Mr Lim said there are certain companies or certain providers of AI technology and services that are in good stead. But companies like Internet platforms that host those AI services and products on their websites may benefit more.

“Typically, they are not a one-act wonder. They have other businesses, and they already have customers. Those are interesting opportunities,” he added.

He noted that GIC is focused on where the value will be captured as AI technology develops and is deployed. 

“So, for investors, it’s quite important not to get caught in the front end of that revenue generation but look through the value chain and see where you know it actually is being captured.”

Beyond AI, Mr Lim said GIC sees long-term opportunities in infrastructure investments, especially those in energy transition and digitalisation.

He also spoke about GIC’s China investment strategy at the conference.

He said the company is “doubling down” on some sectors in China, while it remains cognisant of the difficult period the world’s second-largest economy is going through.

“China is facing a very complex set of issues,” he said, referring to the decline in the property sector and high youth unemployment.

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On top of that, Mr Lim said Beijing has set some lofty goals to change the economy’s growth model. Consumption will play a bigger role in the coming years and could present opportunities, he added.

“We think China is definitely investable,” he said, adding that investors should know where to invest and what the opportunities are.

“For example, there are certain sectors in China which are world leading, such as green technology.”

Mr Lim said that while GIC is doubling down on some sectors in China, the strategy is not hugely different from how the state investor invests in other countries.

He said top-down investment strategy – where investment follows certain global themes – has become more and more difficult in today’s world: “You cannot quite apply the same theme across all regions or countries.

“Instead, in the last at least five years in my company, we have been talking more about getting more and more granular.” 

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