SINGAPORE — The Republic’s investment firm, Temasek Holdings, on Tuesday (July 11) reported its net portfolio value rose 13 per cent to a record S$275 billion for the year ended March 31, boosted by the surge in share markets both in Singapore and globally.

The rebound came after Temasek suffered a 9 per cent decline in net portfolio value in the previous financial year, in what was the first drop since the global financial crisis.

Over a longer time horizon, Temasek’s 10-year and 20-year annualised total shareholder returns (TSR) amounted to 4 per cent and 6 per cent respectively, it said in its Annual Review published on Tuesday, compared with 6 per cent for both measures in the previous year.

TSR compounded annually since the firm’s inception in 1974 was 15 per cent, while dividend income from its portfolio was S$7 billion for the year ended March 31, about 19 times its interest expense for the year, Temasek added.

“The performance comes in at the higher end of my expectations. Looking at the underlying markets, the performance by Temasek is almost a reflection of how well the Straits Times Index (STI) does. A big chunk of the company’s portfolio is in Singapore stocks,” said CIMB Private Bank economist Song Seng Wun. 

In the 12 months to March 31, the STI climbed about 13 per cent, the Shanghai Composite Index rose 7 per cent, while the Dow Jones Industrial Average gained 16 per cent, Bloomberg data showed.

Mr Song said it is difficult to make a direct comparison between the report cards of Temasek and sovereign wealth fund GIC as the latter does not publicly disclose its portfolio size and single-year return.

“Temasek does look at it from how it varies year to year, reflecting more so its equity portfolio. Both GIC and Temasek have different investment philosophies — Temasek is more Singapore-centric whereas GIC takes a far larger global perspective. They have different areas of focus,” he added.

GIC on Monday reported an annualised real rate of return of 3.7 per cent over the 20-year period that ended March 31, down from 4 per cent a year ago and 4.9 per cent in 2015.

GIC chief executive Lim Chow Kiat said a combination of stretched valuations, high policy uncertainty and unresolved economic imbalances prompted the sovereign wealth fund to take a cautious portfolio stance, having built a resilient and diversified portfolio.

On Tuesday, Temasek sounded a “constructive outlook” on the global economy but added that this is tempered by signs of political risks and stretched public market valuations, especially over the medium term, echoing some of GIC’s concerns. 

Mr Michael Buchanan, head, strategy and senior managing director of the portfolio strategy and risk group at Temasek, said: “We expect the more synchronised global growth we have seen over the past year to continue, driven by key markets in both mature and growth economies.”

As an active investor, Temasek continued to reshape its portfolio while adopting a measured and disciplined investment pace, said Mr Lee Theng Kiat, executive director and CEO of Temasek International. 

The firm invested S$16 billion and divested S$18 billion of its portfolio last year, resulting in a net divestment position for the first time since March 2009. 

Among the key divestments were its 67 per cent stake in Neptune Orient Lines to France’s CMA CGM for about S$2.3 billion. The major investments included an additional S$1.6 billion of new shares in Singtel, Singapore’s largest listed company.

It also acquired all the minority shares in land transport operator SMRT Corp for S$1.2 billion, subsequently taking the firm private. 

Meanwhile, Temasek continues to focus on new longer-term opportunities such as those in as technology, life sciences, agribusiness, non-bank financial services, consumer, and energy and resources, Mr Lee said. 

Over the past six years, its investments in these areas have risen from 8 per cent of its portfolio to 24 per cent last year, “delivering better returns than our average return from our portfolio as a whole”, he added.