July 2021
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July 2021
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Analysis: How much air is in Temasek’s bounce?

Temasek Holdings
By Paul Mackintosh   
July 21, 2021

Temasek Holdings is currently ranked sixth in the Sovereign Wealth Fund Institute’s top 100 by total assets, at just over US$484.44 billion. Some would argue that the Singapore state investment company deserves to be ranked even higher in terms of influence and thought leadership. So its recently released 2021 review naturally merits attention. How does Temasek look after emerging from 12 months of Covid-19?

Very good in performance terms, is the answer. According to the review, Temasek’s one-year return to shareholders was 24.53% as of March 31, 2021 compared to a total 14% return since inception in 1974. And its net portfolio value as of March 31 was a record high S$381 billion ($280.72 billion).

Temasek both invested and divested heavily in the 12 months through March 31. Investment was S$49 billion and divestment S$39 billion, both all-time highs. This level of activity was paralleled with policy moves such as opening new offices in Brussels and Shenzhen to build new relationships and tap new opportunities.

Does this sterling performance deserve any scepticism? Well, unfortunately perhaps, yes it does. For one thing, owing to the counterintuitive but practically universal behaviour of asset values since March 2020, it’s been extremely hard for major institutions to lose money over that period.

Norway’s Government Pension Fund Global, the largest sovereign wealth fund in the SWF Institute league tables, saw a 10.9% return in 2020. The California Public Employees' Retirement System or CalPERS reported a 21.3% return for its financial year ended June 30, 2021.

In short, Temasek’s performance is strong, but very much in line with its peers.

Then there’s the presentational aspect. Temasek’s strongly articulated commitment to sustainability and net zero, aiming to halve its portfolio emissions by 2030 and reduce them to net zero by 2050, is commendable. But again, hardly unusual among its institutional peers.

However good Temasek’s intentions, personally I’m still reading plenty to confirm my prejudices about Temasek, and Singapore. Is Temasek still the exceptional outlier it used to be? Is Singapore? It’s worth considering.