Singapore’s Temasek posts lacklustre annual return

10 July 2014   Category: News, Asia, Global, Singapore   By Maya Ando

Singapore’s sovereign wealth fund (SWF), Temasek Holdings, posted a lacklustre return of just 1.5% on its investments for the year ending 31 Match, on AUM of S$223 billion (US$179.6 billion), amid heavy exposure to poorly performing Asian equity markets.

Over the last 12 months, the SWF gained roughly S$3 billion from its portfolio, in addition to receiving an S$5 billion fresh capital injection from the Singaporean government.

Temasek Chairman, Lim Boon Heng, said: “This year has been one of our most active years for new investments – the most active since the Global Financial Crisis – driven by softer Asian markets of interest, as well as the continued recovery of the global economy."

"In the course of the past year, the US tapered its loose monetary stance and China reined in its debt fuelled growth. This bodes well for the longer term, though major central banks will most likely take some years to unwind the massive balance sheet expansions of the past five years," Mr. Lim noted.

In terms of geographic distribution, Temasek has been increasing its exposure outside of Singapore, with around 41% of its portfolio allocated to investments in Asia. In this region, most of Temasek’s investments were said to be in China, with the fund focussing on the rapidly growing consumer and technology sectors.

Lee Theng Kiat, president of Temasek, said that the fund has invested in opportunities that are driven by urbanisation and increasing life expectancies.

Elsewhere, the state-owned fund has forayed into other emerging markets including India and Mexico. Just under a third (31%) of its assets were in Singapore, representing a significant decrease from its local exposure in 2004, when 51% of investments were in the city state.

Based on a long-term growth strategy, Temasek said that it will increase exposure to emerging markets and opportunities, such as healthcare for ageing populations, personalised medicine, and ecommerce.

Incorporated in 1974, this year marks Temasek’s 40th anniversary.