The effort of the Government of Singapore Investment Corp (GIC) to market part of its share in Citigroup can ease up funds for other higher generating investments.
According to market-watchers, this can include the energy sectors that are rapidly growing in emerging markets like Russia and Brazil.
The decision of the GIC to sell half of its share in Citigroup can draw a profit gain of around US$1.6 billion.
Given how US markets are not likely to recognise similar growth rate that it has observed in the previous quarter, the funds of the GIC can be headed for higher generating investments, observers said.
"Going forward, there are better alternatives with a similar risk return calculus, which I think can generate better upside for a stock market investor. As I said some of the emerging markets are the most compelling. I like, for instance, the energy sector. I think energy prices are firming up and you could see bigger dividends for energy related companies," said HSBC Private Bank Chief Investment Strategist in Asia Arjuna Mahendran.
Last Tuesday, the GIC announced that its stake in Citigroup had sold down below five percent, down from the 9.4 percent after its preferred shares had been converted to common stocks earlier this September. The GIC affirmed its trust to the long-term prospects of the Citigroup.
US financials still have upside potentials that can serve the remaining shares of GIC. This is owed to the improvement in bank’s confidence and big lender’s enhanced asset quality.
"What you find is that most of the private investors who have gone in have made reasonable money in the last six months with the rise in the levels of stock markets. The initial investments in some of these assets as they were at the time have been quite phenomenal. If anything, the appetite to invest money in the shares of these banks has increased," claimed Mr. Arjuna Mahendran.