Singapore’s skyline isn’t the only thing that’s a bit hazy

By Paul Mackintosh - 24/06/13

Latest reports indicate Singapore remains shrouded in haze from forests burning in neighbouring Indonesia, with public health warnings, businesses closed and people working from home. A good time, then, to be one of the Singaporean staff appointed to its new office in London, recently incorporated to oversee Temasek investments in Europe. The new locally incorporated entity will be jointly headed by John Cryan, co-head of Temasek's portfolio and strategy group and president for Europe.

Despite the low growth expectations within Europe itself, Temasek appears to be seeking out investments there which have exposure to emerging markets growth. “The sector is a good proxy for the needs of transforming economies and growing middle income populations, both of which are part of Temasek’s investment themes,” said Tay Sulian, managing director, investment at Temasek, following its acquisition in March of an additional 5% stake in Spanish petrochemicals MNC Repsol for €1.04 billion (US$1.37 billion). Temasek declares itself as currently in a solid investment position. “We closed [2012] with a steady S$198 billion (US$155.5 billion) portfolio, including a comfortable net cash position,” said S Dhanabalan, Temasek chairman, on the announcement of the sovereign wealth fund’s (SWF's) latest review at end March 2013.

However, London was also the venue for one small debacle in Temasek's history in spring 2006, when the SWF picked up a £2.3 billion (US$4 billion) stake in Standard Chartered, another European entity with strong exposure to emerging markets. Then, Temasek accidentally leaked a detailed media relations Q&A to various media, revealing how it viewed British and broader Western perceptions of its activities. The document was all reassurance, emphasising Temasek's value orientation as an investor and its distance from the Singaporean government, and its intention to act purely on a commercial basis.

More recently, Temasek has been exerting pressure on the board at Standard Chartered over the bank's governance upsets in the US and elsewhere, especially the appointment of more independent directors. But Temasek's own governance issues have never been satisfactorily resolved. “Neither the president of Singapore nor the government is involved in our investment, divestment or other business decisions,” declares Temasek's website. But Ho Ching, wife of Singapore's prime minister, remains the president of the SWF, after the negotiations to appoint an independent director in the shape of Charles “Chip” Goodyear, former head of BHP Billiton, foundered in 2009, apparently in the face of internal and institutional resistance. As with the haze, Singapore Inc. apparently still has a little further to go.