Temasek’s portfolio jumps to record S$215b for last FY

SINGAPORE — Temasek Holdings saw its portfolio jump to a record high in the last financial year, with significant global stock market gains helping to increase the value of its assets.

In the financial year ended March 31, Temasek’s net portfolio value reached S$215 billion, a gain of 8.5 per cent, or S$17 billion, from S$198 billion in the previous year. Chief Executive Ho Ching pointed out that the investment company is largely invested in equities, which can mean a lot more year-to-year volatility. But Temasek is prepared to ride through that volatility, “because a portfolio of mostly equities also means we expect higher returns over the long term from our portfolio”, she said.

CIMB economist Song Seng Wun said the performance is largely consistent with the recovery in the global equity markets. “While the growth is slightly below the 9.3 per cent gain in the MSCI World Index in that period, its investments into growth areas such as energy could see returns in the long term.”

The one-year total shareholder return (TSR) rebounded sharply to 8.86 per cent, up from 1.5 per cent in the previous year. The 10-year TSR, which better reflects Temasek’s long-term investment strategy, was 13 per cent, up from 10 per cent.

Mr Rohit Sipahimalani, co-head of Temasek’s investment group, said it had been a year of steady performance amid market volatilities: “Our returns were higher than our costs of capital, giving us a solid balance sheet and a net cash position. This gives us full flexibility to take advantage of opportunities going forward.”

Those opportunities may include additional investments in North America and Europe, which Temasek pinpointed as regions with growth potential. To tap into that potential, Temasek increased the proportion of its combined investments in those two areas to 12 per cent from 11 per cent in the previous year, while offices are being set up in London and New York to support investment activities in these markets. But Asia, which accounts for 71 per cent of Temasek’s total portfolio, remains the focus of attention, said Chairman S Dhanabalan.

“While we have increased our exposure in North America and Europe, Asia continued to attract the largest proportion of our investments,” he said. “We remain anchored in Asia and are optimistic about its long-term growth.”

Reflecting that confidence, Temasek spent S$94.4 million just last week to increase its holding in Industrial & Commercial Bank of China from 7.92 per cent to 8.07 per cent.

But the strategy of investing in Chinese banks has recently come under scrutiny in the aftermath of last month’s liquidity crunch in the world’s second-biggest economy. Mr Chia Song Hwee, head of Temasek’s investment group and China co-head, said there was no major worry. “There is sufficient liquidity in the system ... The banks we invested in are very well capitalised,” he said.

Looking ahead, Temasek will have to battle against an uncertain economic climate. While things have improved, Temasek said, risks remain with China’s growth expected to moderate, the weak eurozone environment and inevitable monetary tightening in the United States.