A Temasek Holdings signage at their workplace in Singapore.
Munshi Ahmed | Bloomberg | Getty Photos
Singapore’s Temasek stated Tuesday most of its funding capital will hold going into the U.S. with the state funding firm specializing in the early adopters of AI amongst conventional industries within the nation.
Whereas the U.S. total seems to be costly, the S&P equal weight index is at simply 16 instances earnings, which is under its long-term common, stated Rohit Sipahimalani, Temasek’s chief funding officer to CNBC.
Temasek, which didn’t give a precise breakdown of its publicity to U.S. belongings, stated Americas area constituted 22% of its portfolio.
The agency, whose portfolio worth rose by practically 2% to $389 billion Singapore {dollars} ($288 billion) in its monetary yr ended March, added that it was cautious on the Chinese language market.
It identified that whereas China’s authorities has a pro-growth stance that may help its restoration, structural challenges stay within the economic system, and with out a rise in home demand, China’s economic system and inflation charges will proceed to face downward strain.
Temasek deputy CEO Chia Tune Hwee stated that the challenges that China has are very a lot on the demand facet of the economic system.
Firms that “drive home consumption or fulfill home consumption,” similar to in sectors like biotech, robotics and people in electrification and the electrical automobile worth chain shall be fascinating, Chia stated.
He added that whereas a few of these companies have export potential, attributable to geopolitical dangers, the agency is actually corporations that may solely depend on the home market and are much less reliant on exporting to different nations.
Total, Temasek will preserve a cautious strategy and can proceed to observe authorities insurance policies on the earth’s second largest economic system, the state investor stated. Chinese language belongings made up 19% of Temasek’s portfolio, down from 22% within the 2023 monetary yr.
The agency can be seeking to spend money on Japan, which has seen a pickup in overseas investor curiosity as its markets have surged to report highs this yr.
Alpin Mehta, deputy head of personal fairness investments in Temasek, defined that Japan’s company scene continues to profit from structural and cyclical tailwinds attributable to company governance reforms.
“Over the past couple of years, we have seen a pickup in non-public fairness actions in Japan, and these are a number of the funds that we’re traders with. So our concept is to speculate alongside them, do co-investments alongside them.”
Temasek has seen its publicity to Japan enhance to 1%, up from “virtually nothing couple of years again,” Mehta stated, including that it was nonetheless “early days.” A few of Temasek’s portfolio corporations have publicity to Japan, similar to Vertex Capital, in addition to actual property corporations Capitaland and Mapletree, he identified.
The agency does see alternatives in India attributable to a big home market and provide chain diversification, in addition to Europe, the place it sees alternatives within the inexperienced vitality transition.
For the 2024 monetary yr, Temasek has made SG$26 billion of investments into sectors similar to know-how, monetary providers and healthcare.
Outdoors of Singapore, most of Temasek’ funding capital went to the U.S., adopted by India and Europe.
Portfolio efficiency
After marking its unlisted belongings to market, Temasek’s mark to market internet portfolio worth stood at SG$420 billion, up from SG$411 billion the yr earlier than.
Temasek stated that it selected to launch this metric as unlisted belongings made up a majority of its portfolio at 52%, up from 20% in 2004. “With this enhance in publicity, reporting our unlisted belongings at mark to market worth could be extra in step with our friends.”
Sipahimalani stated “we discovered over the past decade that we’ve extra of an edge on the non-public facet, simply because it is a perform of our higher entry, how we are able to work with these corporations and so forth.”
He defined that the agency doesn’t have a goal ratio for unlisted and listed belongings in its portfolio, however will make investments when it finds the precise alternatives.
“We have to have a stability of liquidity versus non-public belongings. So that they’ll all the time be a stability on the market, however there is not any particular goal that we’ve. I believe we’re pretty comfy,” he provides.
Whereas its one-year complete shareholder return was up just one.6%, up from a 5% decline in 2023, Temasek’s 10-year complete shareholder return held regular at 6%, whereas the 20-year metric stood dipped barely to 7% from 9%.
This was as a result of exclusion of the 2004 monetary yr, which noticed a 46% one-year TSR after the SARS pandemic.
Individually, the corporate divested SG$33 billion for the monetary yr, leading to a internet divestment of SG$7 billion, in comparison with a internet funding of SG$4 billion a yr in the past.
