Temasek delivers record returns in fiscal year
09 July 2013
News, China, Global, Singapore
By Asia Asset Management
Temasek Holdings (Private) Limited released the tenth edition of its annual performance review, Temasek Review 2013 – Beyond Investing on July 4. At the financial year-end of March 31, the fund had delivered a record net portfolio value of S$215 billion (US$168.04 billion), up $17 billion from $198 billion the previous year.
Temasek’s Chairman S Dhanabalan said: “Last year, there were some signs of a recovery in the global economy. The severe disruptive risks from the global financial crisis subsided, but structural risks have not been completely resolved. Despite the turmoil over the last decade, the Temasek portfolio value more than tripled in Singapore dollar terms from a trough of $61 billion in March 2003, when the SARS epidemic hit Asia.
“While we have increased our exposure in North America and Europe, Asia continued to attract the largest proportion of our investments. We remain anchored in Asia and are optimistic about its long-term growth.”
In Singapore dollar terms, the total shareholder return (TSR) for the year was 8.86%. Its three-year TSR was 4.94% compounded annually. The longer term ten-year and 20-year TSRs were 13% and 14% respectively. Meanwhile, since Temasek’s inception in 1974, it has been 16%.
The report said that newer investments, made after March 2003, had delivered annualised returns of 20% over the last ten years. These newer investments include additional investments in long-held portfolio companies such as DBS and CapitaLand, where it participated in their rights issues or other capital raising programmes. Meanwhile, its older portfolio of investments, including shares held as at March 31, 2003, such as SingTel and Singapore Airlines, delivered 16% annualised returns over the past ten years.
Financial services remained the largest portfolio exposure by sector, at 31%. It increased its stake in the Industrial and Commercial Bank of China, the world’s largest bank by market capitalisation; and deepened exposure to the Asian insurance sector with stakes in AIA and Ping An Insurance.
On a geographic basis, Singapore and China remained the largest exposures at 30% and 23% respectively, based on underlying assets, which included the assets in portfolio companies.
Exposure to North America and Europe grew to 12% during the year, arising from investments in the energy and resources sector, and other investments such as Evonik, a German specialty chemicals company.
Investments in growth markets included PT Matahari Putra Prima Tbk, a leading operator of hypermarkets in Indonesia, and a stake in Halkbank, a Turkish bank with a leading market share in small and medium-sized enterprise (SME) banking.
Ho Ching, executive director and CEO at Temasek, said: “We think and act as owners of the Temasek portfolio. We are almost entirely invested in equities. This means a lot more year-to-year volatility, as we have seen over the last ten years. We are prepared to ride through the large mark-to-market volatility on our portfolio value, because a portfolio of mostly equities also means we expect higher returns over the long term from our portfolio.
“While Asia and Latin America will continue to be focus areas for us, we do see increasing opportunities in North America and Europe. We are setting up offices in London and New York to support our investment activities in these markets.”
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