Temasek records highest-ever net portfolio value of S$308 billion. This means it’s richer than ever.
So much money.
The global economy may be heading into choppy waters, but Temasek at least is flying high.
The Singapore state investment company reported strongly positive figures on Tuesday, July 10, based on their performance from the previous financial year (April 1, 2017 to March 31, 2018).
Here’s what we learned:
1. Surpassing S$300 billion in net portfolio value for the first time
Temasek’s net portfolio value in the last financial year surged to an all-time high of S$308 billion.
This is an increase of S$33 billion from the previous financial year, which stood at S$275 billion, also a record at the time.
It also represents an approximate three-fold increase since the peak of the dotcom boom in 2000 (about S$100 billion).
Last year, Temasek invested (ploughed money into companies, stocks and assets) S$29 billion and divested (sold existing stakes they had in various places) S$16 billion.
Over the past decade as a whole, Temasek has invested more than S$200 billion and divested around S$150 billion. They also ended the financial year in a net cash position — meaning it has funds available for deployment at its immediate disposal if needed.
Temasek recorded a one-year Total Shareholder Return (TSR) of 12.2 per cent, a slight decrease from the 13.4 per cent posted in 2017.
Earlier estimates by Reuters proved to be on the mark, as they predicted that Temasek would announce a net portfolio value of about $300 billion.
According to Temasek’s joint-head in portfolio strategy and risk Rohit Sipahimalani, Temasek’s strong performance was buoyed by banks in the region, in particular in China, as well as strong growth from companies like Korea’s Celltrion, a life sciences company. On the whole, Rohit said companies in the Asia Pacific region, which form a majority of Temasek’s overall investment portfolio, were key outperformers.
2. Focus on tech disruptors & sustainability
Temasek says it is focusing its investment strategy on supporting companies that are benefiting from overall long-term trends in the global economy.
For example, the rise of the sharing economy of course meant a big investment in Indonesian ride-hailing firm Go-Jek earlier this year. It continues to grow and expand into the region, with news that it’s also coming to our shores:
Another trend identified was the improvement in medical care, leading to longer lifespans. However, this means that more people are suffering neurodegenerative diseases as they grow older.
With an eye on this trend, Temasek invested in biotech company Denali Therapeutics, a company that focuses on developing cures for age-related diseases such as Alzheimer’s and Parkinson’s.
With cryptocurrency becoming a hot-button topic, Temasek invested in R3, a company involved in the Blockchain technology used in cryptocurrency in 2017.
As a result of these trends, Temasek has increased their investments in the tech, life sciences, agri-business, non-bank financial services and consumer sectors.
These currently make up some S$80 billion, or 26 per cent of their current total investment portfolio, up from just S$9 billion (5 per cent) in 2011.
And of the S$29 billion in new investments made by Temasek in the latest financial year, investments in these sectors represented nearly half of the total amount.
3. China still important
Now, as a local investment firm, Singapore companies still take up the largest portion of Temasek’s investments by proportion, at 27 per cent of its underlying assets (meaning Singaporean firms with activity overseas only have their local assets counted in this figure).
This figure saw a 2 per cent decrease from last year, however, as Temasek expands its portfolio further overseas.
Accordingly, China is catching up. Temasek’s investments in China now stand at 26 per cent of their portfolio, just behind Singapore and up one percentage point from the previous financial year
In line with their long-term strategy, Temasek has focused on investing in companies involved in the tech sector.
Their investments in China include Internet services company Tencent and WuXi NextCode, a “genomic information company” using data sequencing to serve the health industry.
Temasek is also interested in sustainable, environmentally-friendly companies given China’s rising interest in green technology.
For example, the Chinese government recently introduced measures to support the use of electric vehicles, such as exempting “new-ownership vehicles” from quotas in their biggest cities.
Accordingly, Temasek have backed NIO, an electric vehicle start-up company looking to serve the world’s largest electric-vehicle market.
4. So is the U.S.
Despite the dominance and growth of Temasek’s investments in China, America is catching up too.
U.S. companies enjoyed the largest share of new Temasek investments for the latest financial year, up 1 per cent in terms of its portfolio to 13 per cent. Temasek also increased its investments in financial services companies like Visa and MasterCard.
They also invested in GHX, a company providing a cloud-based supply chain tech solutions for the healthcare industry.
To support their investment efforts, Temasek set up another office in the capital of Washington DC, to complement their presences in New York and San Francisco.
Despite tough talk on trade by U.S. President Donald Trump, Temasek also remains cautiously optimistic that a trade war between the U.S. and China will not get out of hand.
To read Temasek’s 2018 Review in full, you can access it here.
Top image by Jeanette Tan.