GSIS shies away from US equities market for now

State-owned Government Service Insurance System (GSIS), the pension fund for government employees, will shy away from the United States equities market for now given the ongoing financial turmoil.

GSIS president and general manager Winston Garcia said the move is to ensure that the agency’s global investments remain sound despite the tension in the US markets.

Garcia said that GSIS’ global investment program (GIP) which has funds of up to $1 billion, is not geared towards the

US and its equities market alone.

“Our fund managers were given the flexibility to determine their investment strategy, both in the asset allocation and the instrument selection, and where they want to put the investments. The GIP is not limited to US stocks,” he said.

The GSIS earlier named ING Investment Management and Credit Agricole Asset Management (Singapore) Ltd. as global fund managers for the GIP, with each given a mandate of $300 million each. Citibank, N.A. was named as the global custodian.

The GSIS chief said he believes that the financial meltdown in the US will not persist for a long period of time.

“We have taken a three-year view for the GIP. The market may be down now, but over the next couple of years it could bounce back. We also must remember that in every crisis, there is an opportunity. The freefall of the US stocks means stocks have become cheap. Over time, it’ll be a good time to buy,” Garcia said.

The GSIS chief added that the GIP model, which has a budget of up to $1 billion dedicated solely for different investment instruments overseas, was able to withstand the full, initial impact of Lehman’s fold-up.

Last week, US insurer American Insurance Group (AIG) was facing a financial crisis while investment bank Lehman Brothers also filed for bankruptcy. Its rival Merril Lynch & Co. agreed to be taken over by the Bank of America, also due to financial problems.