SHANGHAI: The Government of Singapore Investment Corporation (GIC) expects the management of foreign exchange reserves to be more difficult in the coming years due to economic uncertainties and market volatility.

The point was made by GIC's Deputy Chairman and Executive Director, Tony Tan, who was speaking at a panel session of the Lujiazui Forum in Shanghai on Friday.

Chinese government officials are trying to position the Lujiazui Forum as an international event that is similar to the annual World Economic Forum in Davos.

Financial executives and various government leaders are expected to discuss the changes and outlook for the global financial industry, as well as China's growing influence in the world market, over the two-day forum.

The theme for this year's forum is "Deepening financial reform: China and the world".

Dr Tan said the way countries manage their reserves has important implications for global financial markets.

"Managing foreign exchange reserves to secure a satisfactory return within acceptable risk limits is likely to be more challenging in the coming years as compared to the past decade," he said.

Dr Tan also said economic risks could increase further over the next year because of a rise in energy prices or a fall in US real estate valuations, which could dampen sentiments and consumer spending.

"Because of the actions taken by the Fed, the financial markets have stabilised to a certain extent but there are many economic risks ahead," he added.

On the global credit crunch, he said the market for lending between banks has not normalised because lenders cannot properly assess one another's credit exposure.

GIC has multi-billion-dollar stakes in major financial firms such as Citigroup and UBS. It has said that these investments will give good long-term returns, despite the current market volatility.


- CNA/so