Temasek trims investment pace as performance stutters

The government-controlled investment fund saw its net portfolio value reach a record high of S$313 billion ($231 billion) during the 12 months ended March, but the year-on-year increase was just 1.6% compared to 12% in 2018. Over the same period, the one-year shareholder return went from 12% to 1.49%. In US dollar terms, the portfolio value dropped to $231 billion from $235 billion.

Divestments amounted to S$28 billion, up from S$16 billion in 2018, while new investments fell from S$29 billion to S$24 billion. Temasek said this reflected a deliberate tempering of its investment pace in response to macroeconomic headwinds.

The group echoed concerns recently expressed by GIC Private about the impact of China-US trade tensions and how an increasingly challenging global environment may dampen business confidence and investment. Key economic risks include a late cycle recession in the US, Brexit and political fragmentation in Europe, and China’s hesitance to push forward with structural reforms.

“Restrictions on the technology front could lead to a bifurcation of technology systems globally. This could have meaningful impact for medium-term growth and productivity. Policymakers have signaled their willingness to undertake accommodative actions, but such policy space is limited, particularly in markets where rates are already low,” said Png Chin Yee, a senior managing director in the portfolio strategy and risk group.

Temasek pared its large positions in publicly traded companies – chiefly in Singapore – and this has resulted in larger allocations to the unlisted space. The unlisted share of the portfolio rose to 42% from 39% in 2018. This exposure includes direct investments and fund commitments.

The group reaffirmed its commitment to technologies that leverage long-term economic transformation and growing middle-income populations. Investments highlighted in the annual report include India ride-hailing business Ola, Singapore e-commerce platform Zilingo, and China’s Ant Financial, and WeWork China. Various artificial intelligence-related deals were also referenced.

In addition, there were commitments to several funds managed by Southeast Asia-focused venture capital firms, among them Golden Gate Ventures, Jungle Ventures, Monk’s Hill Ventures, Openspace Ventures, and Wavemaker Partners.

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• Topics
• Southeast Asia
• Performance
• LPs
• Technology
• Singapore
• Temasek Holdings