A Temasek Holdings signage at their workplace in Singapore.
Munshi Ahmed | Bloomberg | Getty Photographs
Singapore’s Temasek mentioned Tuesday most of its funding capital will maintain going into the U.S. with the state funding firm specializing in the early adopters of AI amongst conventional industries within the nation.
Whereas the U.S. general seems to be costly, the S&P equal weight index is at simply 16 occasions earnings, which is under its long-term common, mentioned Rohit Sipahimalani, Temasek’s chief funding officer to CNBC.
Temasek, which didn’t give a precise breakdown of its publicity to U.S. property, mentioned Americas area constituted 22% of its portfolio.
The agency, whose portfolio worth rose by almost 2% to $389 billion Singapore {dollars} ($288 billion) in its monetary yr ended March, added that it was cautious on the Chinese language market.
It identified that whereas China’s authorities has a pro-growth stance that can assist its restoration, structural challenges stay within the economic system, and with out a rise in home demand, China’s economic system and inflation charges will proceed to face downward strain.
Temasek deputy CEO Chia Music Hwee mentioned that the challenges that China has are very a lot on the demand aspect of the economic system.
Firms that “drive home consumption or fulfill home consumption,” akin to in sectors like biotech, robotics and people in electrification and the electrical automobile worth chain shall be attention-grabbing, Chia mentioned.
He added that whereas a few of these companies have export potential, because of geopolitical dangers, the agency is admittedly corporations that may solely depend on the home market and are much less reliant on exporting to different international locations.
General, Temasek will preserve a cautious strategy and can proceed to observe authorities insurance policies on the earth’s second largest economic system, the state investor mentioned. Chinese language property made up 19% of Temasek’s portfolio, down from 22% within the 2023 monetary yr.
The agency can be trying to put money into Japan, which has seen a pickup in overseas investor curiosity as its markets have surged to file highs this yr.
Alpin Mehta, deputy head of personal fairness investments in Temasek, defined that Japan’s company scene continues to profit from structural and cyclical tailwinds because of company governance reforms.
“During the last couple of years, we have seen a pickup in non-public fairness actions in Japan, and these are among the funds that we’re buyers with. So our thought is to take a position alongside them, do co-investments alongside them.”
Temasek has seen its publicity to Japan improve to 1%, up from “nearly nothing couple of years again,” Mehta mentioned, including that it was nonetheless “early days.” A few of Temasek’s portfolio corporations have publicity to Japan, akin to Vertex Capital, in addition to actual property companies Capitaland and Mapletree, he identified.
The agency does see alternatives in India because of a big home market and provide chain diversification, in addition to Europe, the place it sees alternatives within the inexperienced vitality transition.
For the 2024 monetary yr, Temasek has made SG$26 billion of investments into sectors akin to know-how, monetary providers and healthcare.
Exterior of Singapore, most of Temasek’ funding capital went to the U.S., adopted by India and Europe.
Portfolio efficiency
After marking its unlisted property to market, Temasek’s mark to market internet portfolio worth stood at SG$420 billion, up from SG$411 billion the yr earlier than.
Temasek mentioned that it selected to launch this metric as unlisted property made up a majority of its portfolio at 52%, up from 20% in 2004. “With this improve in publicity, reporting our unlisted property at mark to market worth could be extra in step with our friends.”
Sipahimalani mentioned “we discovered during the last decade that we’ve extra of an edge on the non-public aspect, simply because it is a perform of our higher entry, how we will work with these corporations and so forth.”
He defined that the agency doesn’t have a goal ratio for unlisted and listed property in its portfolio, however will make investments when it finds the correct alternatives.
“We have to have a steadiness of liquidity versus non-public property. So that they’ll at all times be a steadiness on the market, however there is no particular goal that we’ve. I believe we’re pretty comfy,” he provides.
Whereas its one-year whole shareholder return was up only one.6%, up from a 5% decline in 2023, Temasek’s 10-year whole shareholder return held regular at 6%, whereas the 20-year metric stood dipped barely to 7% from 9%.
This was because of the exclusion of the 2004 monetary yr, which noticed a 46% one-year TSR after the SARS pandemic.
Individually, the corporate divested SG$33 billion for the monetary yr, leading to a internet divestment of SG$7 billion, in comparison with a internet funding of SG$4 billion a yr in the past.