Temasek's net worth reaches record for third year in a row

SINGAPORE: Temasek Holdings announced Tuesday (July 9th) a record net book value for the last fiscal year – its third consecutive – despite the reduction in its pace of investment to navigate a challenging environment.

For the year ended March 31, the net value of its portfolio reached $ 313 billion, compared to $ 308 billion a year ago, according to its latest annual report.

However, its total shareholder return over one year fell to 1.49% from 12.19% a year ago. Dividend income remained stable at S $ 9 billion for the year.

In the future, Temasek remains cautious about the unfavorable macro-economic environment that includes a protracted trade dispute between the United States and China.

For the year under review, Singapore's public investment company invested $ 24 billion in Singapore and sold $ 28 billion. This marked a reversal of the previous year when investments exceeded disinvestments, with Temasek accelerating its pace of divestments in the light of macroeconomic hurdles, a press release said.

Among these divestments are American biopharmaceutical company Gilead Sciences, Cargill Tropical Palm and Brazilian paper producer Klabin. It has also reduced its holdings in Alibaba, the Chinese Internet giant, and in the international technology company CenturyLink, although the group continues to hold significant holdings.

The United States accounted for the largest share of new investment, followed by Europe and China. Mature economies made up 60% of Temasek's portfolio, while growing economies such as Latin America and Africa accounted for the remaining 40%.

Overall, Asia remained the mainstay of Temasek's portfolio, with 66%, with Singapore and China accounting for 26% each. It also increased its exposure in Europe (10%) and North America (15%), in line with emerging trends and opportunities.

Financials (25%) remained its largest sector as new investments continued to focus on non-bank financial technology and payment platforms such as China's Ant Financial.

Technology, media and telecommunications, with 20%, also remained a key investment objective.

"In general, we manage our portfolio and our liquidity to ensure our resilience, especially in anticipation of more difficult prospects. We were concerned about the downside risks of last year and 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 vigilant in the face of headwinds," he added.

LOOKING TO THE FRONT

The escalation of tensions between the United States and China remains worrying, which could further moderate global growth.

Temasek also remains vigilant about the risks of an end-of-cycle recession in the United States, while the risk of a disorderly Brexit and political fragmentation continue to weigh on Europe .

The prospects for China could be further put under pressure by the long confrontation with the United States, although this can be mitigated by its awareness of macro risks and its political leeway.

Overall, Temasek remains optimistic about China's medium-term trajectory, thanks to timely and targeted reforms.

In Singapore, activity is moderating in line with global growth, with growing risks of declining global tensions.

However, the potential for increased trade and investment in the expanding ASEAN region could favor long-term Singapore and certain segments of the economy, including professional, financial and technological services, should remain resilient.