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Temasek's portfolio rises to record US$156b

Publication Date : 06-07-2012


Singapore investment firm Temasek Holdings saw the value of its portfolio rise to a fresh record, even as a turbulent global economy hit returns.

Temasek's portfolio was S$198 billion (US$156 billion) as at March 31, up from S$193 billion (US$152 billion) a year earlier.

However, net profit fell 16 per cent to S$10.7 billion from S$12.7 billion, due to lower earnings from its portfolio companies.

The one-year total shareholder return - a measure of how hard the investment funds are working - fell to 1.5 per cent from 4.6 per cent a year earlier.

The return over 38 years since its inception in 1974 is an annualised 17 per cent.

The shareholder in Temasek's case is the Finance Ministry, to which it pays dividends.

Temasek chief investment officer Tan Chong Lee told a briefing yesterday: "We have a resilient portfolio which rides on the twin transformation of Asia and Singapore... it has been resilient against the volatilities of the past few years."

He said Temasek's 1.5 per cent return beat the returns of other key regional indexes.

The MSCI Singapore, for instance, which tracks the local stock market, fell 2 per cent over the same period, while the MSCI All Country Asia excluding Japan fell 7 per cent.

MSCI World rose, but only by about 1 per cent.

Temasek fell short of its internal performance target by S$12.6 billion, using a measure known as "wealth added". This will affect part of its staff bonus.

"Wealth added" measures performance against a certain rate of return, which takes into account the cost of capital and risk.

Temasek expects heightened volatility in the short term, with contagion risk from the euro zone and a sluggish United States recovery.

However, it said a double-dip recession is unlikely in the US, and it does not anticipate a hard economic landing in China.

Chairman S. Dhanabalan noted yesterday: "Asia's long-term growth potential remains healthy... in the near term, Europe and the US present significant risks, as well as potential opportunities."

Temasek's investment themes include tapping on the growth of middle-income populations and Asian economies. Chief executive Ho Ching said that sectors like consumer goods and services are proxies for demographic drivers of growth.

Temasek's modest one-year return of 1.5 per cent did not come as a surprise to the market.

David Lee, managing director of hedge fund Ferrell Asset Management, said: "It demonstrates how difficult the current market is."

CIMB regional economist Song Seng Wun added: "They squeezed out a return in the tougher environment.

"It's a fairly decent showing, given the more challenging climate, especially in the emerging markets."

Chairman of the Government Parliamentary Committee (GPC) for Finance and Trade and Industry Jessica Tan said: "It's slightly modest and was fairly expected, given where their portfolio lies and the market conditions."

The GPC's deputy chairman, Mr Liang Eng Hwa, said: "The return is a reflection of this market condition where most Asian indexes were in negative territory."


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