SINGAPORE: Temasek Holdings on Tuesday (Jul 9) reported a record net portfolio value for the last financial year – its third in a row – despite pulling back its pace of investment to navigate a tough environment.
For the year ended Mar 31, its net portfolio value rose to S$313 billion from S$308 billion a year ago, according to its latest annual review.
AdvertisementAdvertisementHowever, its one-year total shareholder return fell to 1.49 per cent, compared to the 12.19 per cent a year ago. Dividend income held steady at S$9 billion for the year.
Looking ahead, Temasek is staying cautious amid macro headwinds that include a protracted trade spat between the United States and China.
For the year under review, the Singapore state investment firm invested S$24 billion and divested S$28 billion. This marked a reversal from the earlier financial year when investments exceeded divestments, as Temasek stepped up its divestment pace in light of macroeconomic headwinds, it said in a press release.
These divestments included US biopharmaceutical firm Gilead Sciences, Cargill Tropical Palm and Brazilian paper producer Klabin. It also reduced its stakes in the likes of Chinese Internet behemoth Alibaba and global tech firm CenturyLink, though it said it continues to maintain significant holdings.
AdvertisementAdvertisementThe United States accounted for the largest share of new investments, followed by Europe and China. Mature economies formed 60 per cent of Temasek’s portfolio while growth economies, such as Latin America and Africa, made up the remaining 40 per cent.
Overall, Asia remained the anchor of Temasek’s portfolio at 66 per cent, with Singapore and China accounting for 26 per cent each. It has also been growing its exposure in Europe (10 per cent) and North America (15 per cent) in line with emerging trends and opportunities.
The financial services (25 per cent) remained its biggest sector, with new investments continuing to focus on non-bank financial technology and payments platforms such as China’s Ant Financial.
Technology, media and telecommunications, at 20 per cent, also remained a key investment focus.
“In general, we manage our portfolio and liquidity for resilience, especially in anticipation of a more challenging outlook. We were concerned about the downside risks last year and have deliberately tempered our investment pace,” said Temasek president and chief operating officer Chia Song Hwee.
“We continue to be disciplined in our investment approach and remain watchful of the macro headwinds,” he added.
LOOKING AHEAD
Concerns remain about escalating tensions between the United States and China, which may further moderate global growth.
Temasek also remains watchful around the risks of a late cycle recession in the US, while the risk of a disorderly Brexit and political fragmentation continue to weigh on Europe.
The outlook for China may come under more pressure from the prolonged standoff with the US, it added, though this may be mitigated by its awareness of macro risks and policy headroom.
Overall, Temasek remains optimistic about China’s trajectory in the medium term on the back of timely and targeted reforms.
In Singapore, activity is moderating alongside global growth, with increasing downside risks from global tensions.
However, the potential of increased trade and investment into the growing ASEAN region could favour Singapore in the long run and some segments of the economy, including professional, financial and technology services, are expected to remain resilient.
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