Singapore’s Temasek Holdings posted a record S$308 billion net portfolio value buoyed by its investments in Chinese banks and DBS Group, but also expressed a slowing pace of investment due to near-term risks.
The country’s state investor saw its portfolio value hit an all time high of S$308 billion for the financial year ending in March this year, with an increase of 12% from more than a year ago. Surges in share prices of DBS Group, China Construction Bank and Industrial and Commercial Bank of China contributed to the gains, according to Reuters.
Temasek also posted a record net profit for two years in a row, clocking at S$21 billion for the financial year ending in March 2018. It registered S$29 billion in investments, versus S$16 billion in divestments for the past financial year.
“Our net portfolio value passed the S$300 billion mark for the first time. It is now almost three times the dotcom peak of just over S$100 billion at the turn of the millennium, “ said Lee Then Kiat, the Executive Director and CEO of Temasek International, the management arm of Temasek, in a press statement.
Going forward, the investment company is tempering its pace of investment in lieu of moderating global growth. It is “recalibrating and slowing (its) investment pace over the next nine to 18 months”, according to the report by Channel News Asia.
Going forward, the investment company is tempering its pace of investment in lieu of moderating global growth, a senior executive told Channel News Asia (CNA). It is “recalibrate and slow (its) investment pace over the next nine to 18 months”, it told CNA.
China and tech-startups
Under the leadership of CEO Ho Ching, Temasek has been investing in tech startups in recent years as it sought higher yields in face of global growth slowing.
It has plough billions into China’s tech-space. As recently as last month, it was part of a group of investors that pumped in US$14 billion into Ant Financial, an Alibaba’s affiliate that is the dominant Chinese fintech company that also owns the largest money market fund Yue’er Bao in the world. Investors included Khazanah Nasional, Malaysia’s sovereign fund and GIC, Singapore’s sovereign fund and Warbug Pincus, an American private equity fund.
It also led a US$250 million Series E round investment in Chinese edtech company 17ZUOYE.
Temasek, an early investor in Alibaba, also has a broad range of companies it invested in within the Chinese tech scene. It holds a minority stake in Tencent Holdings, China’s other internet giant, as well as a stake in Didi Chuxing, a transportation app that defeated Uber in China. It is vested in the bike-sharing sector through its investment in Mobike last year, boosted its holdings in travel giant Ctrip last year and genomics firm Wuxi NextCODE late last year. It is also an investor in SenseTime Group, an artificial-intelligence firm touted to the best most valuable company in the AI sector.
With the booming China’s tech-scene, Chinese startups might see more involvement from Singapore’s state investor.
This transition may mean growth is slower overall, but we remain positive on China’s potential to be one of the world’s fastest growing large economies for years to come.
“This transition (to a more consumption driven growth model) may mean growth is slower overall, but we remain positive on China’s potential to be one of the world’s fastest growing large economies for years to come,” said Tay Sulian, a senior executive with Temasek, adding that Temasek will “continue to focus on investing in companies that benefit from structural changes” to reduce financial risks and rebalance growth.
Technology remains a focus of Temasek and since 2017 it has invested in early stage companies in agribusiness, healthcare and digital media according to its statement. These higher risk early stage investments form 3% of its portfolio, according to the company. A senior executive from Temasek also said in 2016 that Temasek is moving towards earlier-stage investments in the Chinese tech-sector due to “crazier valuations” in the pre-IPO stage.
China is also likely to be continuing being a key part of its portfolio, with the country accounting for the second biggest share of new investments in the financial year that ended after the US. The country also remains the second country by portfolio exposure for the state investor at 26%, outside of its home base Singapore at 27%.