SINGAPORE — Singapore’s state funding firm Temasek recorded in 2023 its worst returns in seven years, weighed by a difficult macroeconomic and geopolitical atmosphere.
Temasek posted a 5.07% decline in its one-year whole shareholder return in Singapore {dollars} within the monetary yr that ended March 31, in accordance with an announcement launched Tuesday. This was Temasek’s worst annual shareholder return since 2016 and simply its fifth one-year adverse return since 2003.
“We have now a predominantly equities portfolio, so we will not be resistant to actions out there,” Temasek’s Chief Funding Officer Rohit Sipahimalani informed CNBC.
The S&P 500 and MSCI Asia ex-Japan benchmarks every plunged practically 20% in 2022, roiled by sticky inflation regardless of a number of charge hikes by central banks. Intensifying geopolitical tensions similar to U.S.-China tensions and the Russia-Ukraine warfare additionally added to the unprecedented mixture of complexities.
Temasek’s internet portfolio worth got here in at 382 billion Singapore {dollars} ($287 billion), in comparison with S$403 billion a yr in the past. It additionally recorded a internet $6 billion internet group loss, which was its first in a minimum of a decade.
Nonetheless, Temasek’s decline in annual shareholder return in 2022/23 compares comparatively favorably with world inventory market returns.
Temasek Holdings posted a 5.07% decline in its one-year whole shareholder return in Singapore {dollars} within the monetary yr that ended March 31, 2023, in accordance with an announcement launched Tuesday. Web portfolio worth got here in at S$382 billion, in comparison with S$403 billion a yr in the past. This was simply its fifth one-year whole shareholder adverse return since 2003.
Roslan Rahman | Afp | Getty Pictures
“Going ahead … it relies on how the market does. We’d hope to be extra resilient than the market,” he informed CNBC’s Sri Jegarajah on Thursday. “In case you have a restoration out there, you already know, we’ll do nicely. And if not, then hopefully we nonetheless are constructing a portfolio that not from a one-year perspective, however from a five- to 10-year perspective.”
The Singapore state investor is invested in each private and non-private markets. Unlisted property comprised 53% of its portfolio as at March 31— producing larger returns in listed property. Marking its unlisted portfolio to market would offer S$18 billion of worth uplift, it mentioned.
Its three-year whole shareholder return stood at 8%, whereas its 10-year return was at 6% and 20-year return at 9%.
Portfolio changes
The confluence of a number of world occasions prior to now yr has raised the price of capital and weighed on capital flows, the Singapore state investor mentioned.
“It additionally had an affect on the tempo of power transition, within the face of better demand for power safety and resilience,” Temasek added.
Temasek mentioned its world direct investments, notably within the expertise, well being care and funds areas, noticed “a reversal of good points” within the 12 months ending March 31, as valuations de-rated within the larger rate of interest atmosphere.
Temasek mentioned it consequently slowed down its funding tempo prior to now yr, and adopted a cautious method as liquidity tightened. It invested $23 billion, whereas divesting $20 billion, leading to a internet funding of $3 billion.
Nonetheless, Temasek mentioned it made new investments in funds platform, Stripe, in addition to IT safety supplier Kaseya. That funding in flip enabled its acquisition of Datto, a supplier of safety and cloud-based software program options.
Temasek mentioned it elevated its stake in Mastronardi, a Canada-based firm that cultivates and distributes recent produce grown in greenhouses.
The Singapore’s state investor mentioned it trimmed its portfolio publicity to monetary companies to 21% in 2022/23 from 23% the yr earlier than, It additionally elevated its publicity to transportation and industrials to 23% from 22%. These two sectors are the most important in its funding portfolio.
Early stage investments are capped at 6% of its portfolio, Temasek mentioned.
Ahead steering
In November, Temasek wrote down its $275 million funding in bankrupt cryptocurrency trade FTX.
It subsequently reduce compensation in Could for the staff that really helpful its funding within the now-bankrupt FTX cryptocurrency trade, in addition to for its senior administration staff.
“I’d say we have by no means been seeking to put money into cryptocurrencies,” Sipahimalani mentioned.
“There’s plenty of regulatory uncertainty on this atmosphere,” he added, saying it could be “very tough” for Temasek to make one other funding in cryptocurrency exchanges.
Sipahimalani mentioned the state investor is in search of better portfolio resilience towards the market volatility introduced forth by present world complexities.
India and Southeast Asia are geographical areas that Temasek is seeking to enhance investments, he mentioned.
“India is about 5% of our portfolio immediately. We want to enhance that and have been stepping up our investments within the final couple of years,” Sipahimalani mentioned.
“Southeast Asia is even smaller, we do need to enhance that comparatively in comparison with India. The scale of the general public markets isn’t as large. So it is more durable to search out alternatives of scale to type of do this,” he added. “However we’re actively engaged on that.”
He pointed to Vietnam, which he says stands to disproportionately profit from a few of the regionalization of provide chains.
Sipahimalani additionally mentioned that any recession would characterize funding alternatives for Temasek.
“We do suppose that you simply in all probability want a recession, to get inflation all the way down to ranges that have been acceptable,” the CIO mentioned.
“Truly, I do suppose that any recession will probably be delicate due to sturdy steadiness sheets for the patron and the company stage. And that, I believe, could be an funding alternative for us in the event you see these [market] corrections.”