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Too early to declare 'new normal'
Structural changes occur over a number of cycles and so it is still too early to judge whether the investment landscape has entered a 'new normal', Asian sovereign wealth funds have said.
Chun Hong Chan, managing director and head of GIC's real return program, said that although research and short-term judgments had shown a completely changed world of investing, it was too early to judge and throw away the lessons of old.
"They tend to take place over multiple cycles rather than just one market cycle, so observing what has happened through one market cycle and making a judgment that that's a secular change I think can be quite challenging," he said.
Chan said GIC assessed its performance over a 20-year period because it was not easy to preserve and enhance purchasing power on a short-term basis.
The jury was still out on the permanence of the 'new normal', but shorter-term evidence pointed to some potential changes which were causing investors to adopt a cautious, short-term view including more frequent strategy reviews, according to Chan.
"But that doesn't necessarily mean that we feel that it's the right time to make a call that things have actually changed," he said.
Wallace Yu, director of CIC's multi-asset group, said the way that the market works and the structure of markets was the same now as before the Global Financial Crisis (GFC).
He said investors that subscribed to the 'new normal' made their long-term objectives hard to reach because they had been put in place prior to the financial crisis.
Fund executives presented at the Citi Australian Investment and Asian G10 Rates Conference.
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