9-7-2024 (SINGAPORE) Singapore’s sovereign wealth fund, Temasek Holdings, has reported a modest increase in its net portfolio value, reaching S$389 billion for the financial year ending March 31, 2024. This marks a S$7 billion rise from the previous year, as announced in the company’s annual review on July 9.
The growth in portfolio value was primarily attributed to robust returns from investments in the United States and India. However, the overall performance was tempered by underperformance in Chinese capital markets, reflecting the complex global economic landscape Temasek navigates.
In a significant move towards transparency, Temasek has, for the first time, reported its unlisted assets at mark-to-market value. This accounting practice values assets according to current market prices rather than book value or original cost. Under this new measure, Temasek’s mark-to-market net portfolio value stands at an impressive S$420 billion, representing a S$9 billion increase from the previous year.
Temasek’s Chief Financial Officer, Png Chin Yee, explained the rationale behind this change: “By adopting mark-to-market valuation for our unlisted assets, we aim to provide a more accurate representation of our portfolio’s true value and facilitate easier comparison with our peers.”
The company’s long-term performance metrics showed mixed results. The 20-year total shareholder return (TSR) dipped to 7% from 9% last year, primarily due to the exclusion of the post-SARS recovery period of 2004. Meanwhile, the 10-year TSR held steady at 6% for the second consecutive year.
Temasek’s Deputy CEO, Chia Song Hwee, emphasised the importance of focusing on long-term performance metrics. “As a long-term investor, we place greater emphasis on our 10- and 20-year TSR figures. These provide a more comprehensive view of our investment strategy’s effectiveness across various market cycles,” Chia stated.
The investment giant’s portfolio composition has seen notable shifts. While Singapore remains Temasek’s largest market, accounting for 27% of underlying assets, the Americas have supplanted China as the second-largest market. The Americas now comprise 22% of the portfolio, up from 21% last year, while China’s share has decreased from 22% to 19%.
Connie Chan, Temasek’s Head of Financial Services, highlighted the company’s evolving investment approach. “We’ve been actively reshaping our portfolio to align with four key structural trends: digitisation, sustainable living, future of consumption, and longer lifespans,” Chan explained. This strategy has led to increased diversification, with investments in sectors such as digital payments, financial software, and insurance complementing traditional banking investments.
In the 2024 financial year, Temasek invested S$26 billion in areas aligned with these trends, including technology, financial services, sustainability, consumer goods, and healthcare. The company also divested S$33 billion, resulting in a net divestment of S$7 billion.
Looking ahead, Temasek remains cautiously optimistic about global economic prospects. Alpin Mehta, Head of Real Estate and Deputy Head of Private Equity Fund Investments, noted that while recession risks in key developed markets have largely subsided, geopolitical tensions and the upcoming US presidential election pose potential challenges.
Temasek plans to maintain its disciplined investment approach, with a particular focus on opportunities in green transition and artificial intelligence. The fund also intends to increase its attention on India, Southeast Asia, and Japan, while maintaining a cautious stance on China.
