Temasek talks up China, favors property, financials, healthcare

"China is a number of transforming economies," Greg Curl, Temasek president and head of its operations in the Americas, told an FT conference in Hong Kong. "People have underestimated the opportunities if you look at that massive urbanization in central and western China that is in some respects only just beginning."

Seeking to put the scale of the opportunity in context, Curl referred to an observation made by the head of Boeing in China: the total number of aircraft owned by all of China's domestic airlines is smaller than the fleet of American Airlines, which is bankrupt in the US. "That's why Boeing, General Motors and Volskwagen are so confident that they don't speak in terms of hard or soft landings," he said. "Over a sustained period of time, the opportunities are significant."

Temasek bases investment decisions on where it expects growth to come from over the next eight years. Curl believes the US represents considerable risks over this period given the size of its deficit. Although Temasek's exposure to Asia has fallen from 80% to 70% in the last five years, this is a result of increased exposure to Latin America, not a deliberate dial-down.

Curl talked up the prospects of Singapore developer Capitaland, a Temasek portfolio company with 58 shopping malls in China and a host of new projects in Sichuan province and Chongqing. He highlighted how the likes of Australia and Indonesia, with their natural resources wealth, are beneficiaries of the China growth story, but also noted that energy dynamics are changing, as illustrated by the rise of shale oil.

In the last year, Temasek has co-invested with RRJ Capital in oil exploratory and extraction firm Frac Tech Services and liquefied natural gas (LNG) company Cheniere Energy. Both firms are US-based and represent a bet on future Asian energy demand.

Temasek remains a significant investor in Chinese banks, with minority stakes in Bank of China, China Construction Bank (CCB) and Industrial and Commercial Bank of China. Curl, who previously worked for Bank of America and sat on the CCB board, was positive about the lenders' prospects, saying that their balance sheets are more closely tied to the real economy than in the West.

He noted that the development of the country's capital markets would ultimately ease pressure on banks, which are currently "the only financial intermediaries in China's economy."

Curl drew comparisons between the reforms that have taken place in the country's financial sector since 2004 with what he expects to see in the healthcare sector. Temasek currently has one investment in the sector, but is considering others.

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• Topics
• Southeast Asia
• Greater China
• Temasek Holdings
• Southeast Asia
• China