Here’s what seven investment giants with $2.3 trillion in assets are betting on in 2023

Tumbling global stock and bond prices this year, together with pain in private equity amid deteriorating deal volume left investors around the world casting their nets far and wide for opportunities.

GIC Pte. Ltd., estimate US$690 billion

For Singaporean sovereign wealth fund GIC Pte., preparation means having cash at the ready, a willingness to spend it and an ability to buy low-cost assets as other investors sell out. Chief investment officer Jeffrey Jaensubhakij has made investments that offer protection from inflation and says that price pressures will continue to rise amid tight labour markets and an under investment in commodities.

Longer term, infrastructure projects and commodities can act as a hedge, he said. Meanwhile, student accommodation that can be used as hotels for tourists and business travellers during summer, and telecoms infrastructure and real estate in key markets like Japan and Australia are among his key investment ideas.

“The opportunity opened up so the team responded to that and actually deployed a lot of capital into that space and generated good return,” he said. “That’s another example of something we’d like to inculcate more and do more here.”

Fidelity International Ltd., US$613.3 billion

Anne Richards, chief executive of Fidelity International, said that Asia including China could rebound in sentiment faster than other parts of the world.

“The dynamics in Asia versus the dynamics with the U.S. and Europe are quite different,” Richards said during a panel at the Bloomberg New Economy Forum on Wednesday. “We are more positive on Asia as a region both from a market perspective as well as from a flow perspective for 2023.”

“There’s a lot of optimism of where China is in its interest rate policy cycle, and the benefits that will bring for the region as well as the kind of gradual opening up,” she added.

AustralianSuper Pty Ltd., A$272 billion (US$184 billion)

AustralianSuper chief investment officer Mark Delaney is taking a cautious approach. His pension firm, the largest in Australia, began turning defensive late last year, reducing its exposure to listed equities and credit.

“What we’re most cautious about is the asset classes (in) which values haven’t adjusted yet, and you might put private equity into that category for example, and potentially property and maybe infrastructure,” he said. “The share market probably has done more than half of its adjustments from the peak to what we think is likely to be the trough.”

Instead, the fund expects to be hunting for new investments when good opportunities begin to emerge in about 12 months.

Ontario Teachers’ Pension Plan, $242.5 billion

Chief executive officer Jo Taylor is looking to mining assets, with rare earth minerals and metals a key target.

“Rare metals. Because they are just that — they are scarce and there aren’t that many that aren’t Chinese owned,” he said. “You can have the commodity rather than some sort of traded index, it’s not a big market.”

That means targeting copper producers in Canada and Chile, lithium from Latin America and finding sources of cobalt.

And he’s also scouring markets to find scarcity trades more broadly, from battery manufacturing chains and chip-makers to water, food and Indian businesses where there are relatively few scaled business. In August, OTPP bought a majority stake in Sahyadri Hospitals Ltd. as part of its first private equity buyout in India.

Partners Group Holding AG, US$131 billion

Partners Group chairman Steffen Meister is mindful of the suffering to people and businesses in recent years. But from a business perspective, now is a good time to strike deals, he said.

Meister warns that this only works for firms that anticipated the turmoil. Partners Group has pushed out refinancing until 2025 and hedged much of their rates exposure, he said. The fallout from the U.K.’s recent volatility in the pound and gilts would help boost other opportunities.

“It’s a very human thing when you look at the public markets where people are biased by the immediate reaction,” he said, with near-shoring — moving far-flung operations to countries closer to home — among the investment opportunities he sees in the U.K. “The last two years you were really concerned and now I think you can relax a bit more.”

Temasek Holdings Pte. Ltd., US$295 billion

Temasek International’s chief investment officer Rohit Sipahimalani cited investment themes such as sustainable living, growing consumption, longer lifespans and healthcare.

But where Meister feels now is the time to make deals, Temasek is slowing the pace of investments. One focus is on helping companies in its portfolio survive the impending economic downturn and use it to expand and “strengthen their positions” over the coming year, he said. For new deals, the investment giant will be more selective.

China Asset Management, 1.79 trillion yuan (US$253 billion)

Despite steep declines this year, China’s A-share stock market remains a better option than U.S., European or Hong Kong equity markets, according to Richard Pan, chief investment officer of global capital investment at Beijing-based China Asset Management.

The Federal Reserve still has to hike interest rates to bring down inflation as the U.S. continues to head toward a recession, Pan said. This threatens to fuel outflows from markets like Hong Kong, while Europe is in a worse situation, grappling with the energy crisis and debt issues.

China Asset Management sees opportunities in both new energy and fossil fuels due to the huge demand in the coming decade, and likes healthcare and medical equipment stocks, he said. The company also favours consumer stocks as consumption will normalize, sooner or later, especially high-end players like luxury shopping malls that have seen sales climb even as economic growth cooled. Pan said concerns that China may backpedal on its opening up policy are misplaced, even as COVID surges have stoked concerns.

“The pandemic is a once-in-a-century rare situation and should not be seen as normal,” he said. “People shouldn’t be excessively pessimistic about China’s economy.”

— With assistance from Abhishek Vishnoi and Sarah Wells