Meet the man behind Singapore’s reserves

“Now that I’ve retired from public service, I feel I can make one more contribution to serve the people of Singapore: To safeguard the reserves which I helped to build up from my work at GIC,” says Ng in an interview with The Edge Singapore.

On Aug 19, the Presidential Elections Committee (PEC) issued a certificate of eligibility to Ng following his presidential application through the public sector deliberative track. The PEC said it was satisfied he has the experience and ability comparable with someone who had served for three or more years as the chief executive of a Fifth Schedule entity, which refers to key statutory boards and government companies.

The self-proclaimed “moneymaker” within Singapore’s investment management organisations served as GIC’s CIO between 2007 and 2013 after joining the sovereign wealth fund in 1986.

Former senior minister Tharman Shanmugaratnam and former NTUC Income CEO Tan Kin Lian were also issued certificates of eligibility via the public sector automatic track and the private sector deliberative track, respectively. Ossia International chairman George Goh was determined not to have met the requirements set out by the private sector deliberative track and was not issued a certificate of eligibility.

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While Ng’s name may not be familiar to everyone, he has played key roles in intertwining Singapore’s financial system and the public sector. His 44-year career began at the Ministry of Finance’s overseas investment department in 1970. In 1984, he served as the founding chairman of the Singapore International Monetary Exchange (Simex), which merged with the then-Stock Exchange of Singapore in 1999 to form the Singapore Exchange Group.

After Ng retired from GIC in 2013, he co-founded Avanda Investment Management with former GIC colleagues Quah Wee Ghee and Sung Cheng Chih in 2015, which has since more than doubled its assets to a figure of some US$10 billion as at February 2022.

The investment professional says that while he may have had to step back from his role as Avanda’s chairman to focus on the upcoming presidential election on Sept 1, investing has remained on his mind throughout his campaign period. Ng’s experience leading investment strategy across the public and private sectors taught him that investing is not simply “a matter of hours” but rather “a matter of the mind”. He says: “Investing is a 24/7 endeavour. You should constantly be thinking about your investment strategy in light of the evolving investment environment.”

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He sees investing as the “pinnacle of finance”, integrating various disciplines from accounting to economics and psychology to geopolitical understanding. Through this multi-faceted approach, he guided teams along his career on critical investment considerations, including how asset classes should be allocated, how much risk should be taken or how the currency exposure of their portfolio should be calibrated. Ng says all decisions have the greatest impact on the bottom line.

This understanding may not have crystallised without his joining GIC, which Ng says brought out “the best” in him. “I discovered that I had the aptitude for calculated risk-taking and that I liked to perform — to do well and to be measured,” he recalls. “When you have that kind of opportunity to be involved in such a job and to do it globally, as the GIC did, it is a dream job.”

“Not only did [the job] bring out the best in me, it also benefited the people of Singapore, an aspect I treasured. I wasn’t working for the shareholders of Goldman Sachs, I was working for the people of Singapore.”

Foremost priority

Ng says the growth of the nation’s reserves forms a two-fold “safeguard against uncertainty” for citizens. One aspect of this arrives from investment returns, which is a function of how global financial markets have played out and will continue to play out over the next 10 to 20 years. Much of this lies with how the republic’s investment managers — GIC, Temasek and the Monetary Authority of Singapore (MAS) — choose to invest.

Smart investment choices lead to government surpluses, augmenting the nation’s reserves. These reserves can then be tapped during unexpected events, such as the pandemic, and for challenges like the ageing population.“This is becoming more challenging because of the need to spend more on healthcare given that our population is ageing quickly,” says Ng.

He adds that there are other issues that government spending will need to address, including climate-resilient infrastructure, education, housing and mitigating the effects of the GST increases on lower-income households. The result of increased government spending means that the large surpluses the country enjoyed in the past have decreased and could even incur small deficits. This makes the investment management of the reserves all the more critical.

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Industry figures, including DBS CEO Piyush Gupta, have advocated for Singapore to strategically utilise its reserves, using its wealth to foster stronger regional solidarity. Ng, however, is uncompromising in his belief that Singaporeans should remain the “foremost priority” regarding the nation’s reserves. He says having the ability to spend part of the government’s investment returns for the welfare of Singaporeans should be paramount.

“At the same time, we want to generate enough returns so that half of that can go to increase the pool of reserves for the future,” Ng says. “So our first responsibility is to the people of Singapore.”

He notes, however, that the state’s investment managers — GIC and Temasek, in particular — already have a “disproportionate” amount of investments in Asia, more so than any other global investor. For example, China, Singapore and the rest of Asia comprise 63% of Temasek’s portfolio. For GIC — which invests practically everywhere else besides Singapore, given its mandate to grow the foreign reserves — this figure is somewhat lower at 29%.

“The most important thing is that we do not want the investment of our reserves to be politically motivated. And that is why the government does not interfere with the specific investment decisions made by the GIC or Temasek management,” says Ng.

Emphasising the custodial, non-policy nature of the President’s role, he adds: “If we can generate good commercial returns and at the same time contribute to the economic development [of the region], that is good — but we should not mix up the two.”

Global experience and networks

Ng is aware that investment management is far from insulated from external shocks. He is concerned that geopolitical volatility has created a “period of great uncertainty” in the wider investing environment.

“I think we have to be prepared as a country that is highly dependent on the external economy to be aware of the risks ahead of us and assess how we can fortify our economy should very serious negative events occur,” he says. “That goes back to the importance of having reserves, which are our savings for a rainy day.”

Over nearly three decades, Ng confronted significant challenges in building the reserves. He remembers the 1997 Asian Financial Crisis (AFC) as a particularly “traumatic experience” for Asian economies. “The whole region was overwhelmed by the crisis, but thankfully Singapore did relatively well. We were also negatively impacted but not as much as the other countries, partly because there was a lot of confidence in the Singdollar,” he recalls.

In contrast to the severely devalued Indonesian rupiah, the Thai baht and the Malaysian ringgit — subjected to a drastic capital curb — the Singdollar became a “refuge” during that period of regional turmoil. “There were instances in which the reserves we’d accumulated, the confidence we commanded from overseas investors proved very important for our economic resilience.”

In hindsight, the AFC opened significant investment prospects in Asia as China’s economic rise coincided with its preparations to join the World Trade Organization (WTO). For investors that had the “staying power” and the confidence that Asian economies would recover, led by the growth of China, Ng believes it formed a prime opportunity to be contrarian and to invest for the long term. “That was what the GIC was set up to do, to have a long-term investment horizon to capitalise on short-term volatility.”

As the ceremonial head of state, the President is the symbolic figure representing the nation internationally. Ng views himself as having fulfilled a similar role as Singapore’s “financial ambassador” during his tenure as GIC’s CIO. He explains that he established connections with foreign finance ministers, central bank governors, corporate CEOs, pension fund investors, and even prime ministers during his term.

He adds: “The international role of the President is something I very much look forward to.”

‘Enlightened’ foreign wealth

Ng views the republic’s global economic reputation as crucial for its progress and imperative to maintain. “You only have to ask people from all over the world why they want to come and live and invest in Singapore. That is the evidence that we are exceptional in some ways.”

It was because of this enduring belief that in 2003, he helped establish the Wealth Management Institute (WMI) together with Temasek and GIC to develop Singapore into the international wealth management hub it has become today.

The WMI provides asset management, wealth management, compliance, risk management, family office and business practices training through over 100 accredited programmes.

Given that Singapore is now home to more than half of Asia’s family offices, it makes sense that the WMI helms the Global-Asia Family Office Circle, a network platform that fosters a trusted environment to build capabilities and community in the family office space.

Even though there has been a substantial influx of foreign capital into the country, concerns have emerged about the potential short-term presence of these funds within Singapore’s borders and their potential to constrain any positive impact on the local society.

Regardless of investors’ intentions, Ng believes that Singapore needs to be able to attract foreign investors should it wish to stake its claim as an international hub of finance.

He says: “A financial centre is where wealth is managed, and financial intermediation occurs between borrowers and lenders. If we want to be a global financial centre, we should welcome investors of all kinds — from direct investments from multinational corporations to financial investments from pension funds.”

“If [foreign investors] are not investing long term or are just parking their money [in Singapore], that is for them to decide. They have to weigh the upsides and downsides because it is a commercial decision,” adds Ng. “The government should not be forcing these people to make those decisions, which is important because we could be distorting the markets if we impose rules.”

Even though he does not believe that the government should be enforcing a minimum level of investment in Singapore, he acknowledges that family offices are being granted certain “concessions” to set up in the city-state and that a review of whether they are following the stipulated guidelines will be necessary to decide whether the “conferment of privileges” should continue.

While the presence of family offices in Singapore reinforces the country’s attractiveness as a global financial centre, Ng acknowledges that this comes with the public perception that some high-net-worth individuals are “taking advantage” of the facilities the city-state has to offer. He adds that their contributions to the nation’s economy is a matter of “social importance”.

He also reasons that new and wealthy residents should be “enlightened enough” to realise that it is in their interests to contribute to the welfare of Singaporeans, especially lower-income groups. Ng expresses his support for philanthropy and believes that contributing time is often more valuable than just giving money. “I think it would be desirable for not only major companies and family offices coming to Singapore to be more visible in contributing to philanthropy and structured volunteerism. The leadership of these organisations must set an example.”

Animal welfare

Apart from his roles at GIC and Avanda, Ng’s focus on philanthropy reveals his more compassionate side during the interview. He explains that he takes the opportunities available in his work to meet and encourage family offices to visit Singapore and interact with the wider society. “When they do, I try to ensure that the leaders or owners of these offices visit our social institutions … once they’re put into contact with these organisations, they’re usually impressed at what has been done, then they’ll contribute.”

Ng has walked the talk by contributing to his preferred charities through conference appearances. Some of these charities include the agency for disability SG Enable and charities that focus on palliative care. Animal charities and caring for pets are another interest of Ng’s. “We underestimate the value of pets to our well-being.”

Ng has an 11-year-old Spitz named Cotton, while his fiancée, Sybil Lau, has a British Shorthair who is just one-and-a-half years old. Both pets are dear to the couple, with Ng reflecting fondly upon how they would wait to greet them whenever they return home.

“These [instances] are very moving. It shows that they have feelings and [are able to show us] affection. [So] we underestimate [the value of pets], and I would like to see whether more can be done to support [animal causes] because they contribute to our national well-being in a way that people do not realise. If we want to become a kinder, more gracious society, we should value our pets,” he adds.

Ng also believes that migrant workers should be valued. Commenting on the recent discussions about transporting them on lorries, he deems the practice as “not acceptable”. Ng adds: “Why are we doing that? To save money on transportation, to allow people to make more money. We are putting money first before people, and that is wrong. To develop our society, we should change [people’s] mindsets.”

Hopes for first-time voters

Aligned with his vision for the nation’s future, Ng aims to focus on three key priorities if elected as the ninth President. The first on his list is helping Singaporeans, especially the younger generations, develop “emotional resilience” by drawing on his own experiences. “There is too much stress in our society at all levels… I was very fortunate that I learned to meditate 35 years ago, and I have been teaching meditation to people from all walks of life. I’d like to continue to encourage that because this is something I know, from my own experience, that it has helped me in my life and my work,” he says, adding that working hard to have a good education for themselves is a first step for the young to find right opportunities for themselves.

Ng’s focus on this demographic is for a good reason: An estimated 15% of the electorate will be first-time voters, and he has pulled out all stops to build an active social media presence.

The next step is to take on a broader mindset to see things within a wider context. This can be achieved by reading extensively, says Ng. Additionally, he views public speaking as a vital life skill. “I don’t think our education system has put enough emphasis on that. But that is extremely important for self-confidence. It is also very important to be a leader, to [be able to] communicate. [Otherwise], how would people know what your ideas are?”

Public speaking was not inherent to Ng. As a science student at Montfort Secondary School, it was never a priority. He credits his teachers for coaching him in debating and putting him in public speech contests.

“As a result, I was able to develop self-confidence and the ability to think on my feet, [as well as being able] to respond to questions. I think that [public speaking] is underrated as a very important life skill, especially for the younger generation,” he says, adding that public speaking is also a good tool for seeking good opportunities.

Finally, the third area of Ng’s focus is to ensure that younger Singaporeans have financial literacy, which he is familiar with. “Financial literacy is about your future financial welfare. So you want to encourage people, especially the young, to save as soon as possible, even if it’s only a small proportion of their salary. But the savings habit is extremely important, so you must learn how to invest, and the earlier you can, the better due to the compounding power of investment returns.”

“I think the savings habit and the value of thrift [and] frugality are very important. And there is an analogy between personal finances and national finances. So the reserves are about the savings habit and how to invest long term. So that in times of difficulty, you can draw on that. I think the same principles that go into why our reserves exist also apply to personal finances,” he adds.

Another investing principle to Ng is being clear on one’s horizon for investing — short, middle or being in it for the long-term. Although, to him, remaining in the market for longer is better as investors would then be able to ride the fluctuations and enjoy the long-term growth rate.

A diversified portfolio is another key strategy, and not having a “home bias” is a third. As the former chairman of Simex and having served on SGX’s board as an independent director between 2013 and 2018, Ng recognises the need for a well-supported and attractive stock market. Still, he is aware that investors might want to put some of their investments in other markets and assets where they can generate what they think will be a decent return for themselves.

For investors, the considerations are, unfortunately, getting complicated. Following a brief post-pandemic sputter, the global economy is now dogged by more negative news than ever, with direct repercussions for the global investing climate. Two key themes are being closely watched: When will the US rate hikes pause, and will the tensions between the US and China ease?

Ng believes that the US Federal Reserve, prioritising its fight to curb inflation, is already closer to the end of tightening than in the beginning. “So one should not be too pessimistic. So I think on balance, I think that is a fairly favourable backdrop, as far as global interest rates are concerned, but you must be very patient,” he says.

He also hopes that ties between the US and China will not deteriorate further. “We have pulled back from the brink in the last few months. Let’s hope that continues. If there is an improvement on that front, there will probably be a revival of business, consumer, and investor confidence in the Chinese economy and markets. And then that would contribute to a brighter outlook for the global financial markets.”

Skin in the game

Despite his extensive experience in investing, Ng maintains a straightforward portfolio for practical reasons. “I didn’t have the time because I was so involved in my work,” he explains. Furthermore, he was required to avoid conflicts of interest between his investments and his role at GIC over the years.

Ng says GIC is “very concerned” that there should be no actual or perceived conflicts of interest for the GIC officers, such as front running the investments that will be made. “So, we laid down very strict rules that if you want to invest in something that the GIC is involved in, you have to seek prior approval and declare your investments regularly.”

He continues: “There was also the challenge that because the GIC does business with many financial institutions, banks, brokers, all of them would like to do [us] favours… So we laid out very strict rules with how GIC employees should handle those situations.”

As GIC’s CIO, Ng subjected himself to even greater restrictions. “I had to set a higher standard for myself because it’s quite easy for people to say Kok Song is abusing his position and taking advantage of it for personal benefit. So I said that I would not invest in anything that the GIC invested in,” he says.

Instead, he put his money in Singdollar bank time deposits. Like many Singaporeans, he also invests in residential properties to collect rental income as well. Ng believes that the property market here should continue to receive support with Singapore’s growing income levels, underpinned by the sound economy.

With his retirement from GIC and involvement in an investment management company, Ng embraces a fresh perspective by investing in the same products that Avanda’s clients invest in. “You might say I’m eating my cooking,” he laughs. “That is a simple way of putting it. I focus all my energy on asking ‘how do I do the best for our clients?’ I had skin in the game.”