Singapore’s biggest sovereign wealth fund said on Monday a global recession was increasingly likely but defended its multi-billion dollar bets on Citigroup and UBS as providing good long-term returns.
Sovereign wealth funds globally have poured billions of dollars into major U.S. banks reeling from writedowns linked to U.S. subprime mortgages, which have sparked a global credit crisis.
The Government of Singapore Investment Corp (GIC), which analysts estimate could manage as much as $300bn, said the financial turmoil would leave markets extremely volatile over the next one to two years.
”The financial contagion has now spread beyond U.S. shores, increasing the likelihood of a global financial crisis and recession,” Deputy Chairman Tony Tan said at GIC’s inaugural staff conference on Monday.
”We could be facing a recession which is longer, deeper and wider than any recession we have encountered in the last 30 years,” he said.
Tan made his comments at a staff conference to which the media had been invited. But, GIC declined to answer media queries.
The corporation, which says on its Web site that it manages ”well above $100bn”, rarely communicates with the media but has made efforts in recent months to be more responsive.
Source: FT.com
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