Temasek portfolio surges to record high, Singapore replaces China as top investment destination

SINGAPORE - Singapore replaced China as the top investment destination for Temasek in its last financial year, when the value of its net portfolio rose above $400 billion for the first time despite volatile market conditions.

Counted as one of the world's top investors, Temasek said in its annual review on Tuesday (July 12) that it invested $61 billion and divested $37 billion in the year ended March 31, 2022. That boosted its net portfolio to a record $403 billion for the period.

The portfolio was valued at $381 billion as at end-March last year.

Mr Rohit Sipahimalani, Temasek's chief investment officer, said: "Despite slowing growth prospects and the uncertain outlook, we remain guided by our investment philosophy to generate risk-adjusted returns over the long term."

Singapore assets now comprise 27 per cent of Temasek's portfolio, up from 24 per cent a year earlier. Exposure to China dropped to 22 per cent from 27 per cent in the same period.

The portfolio remains anchored in Asia, with 63 per cent exposure to the region, as measured by underlying assets of its portfolio companies. The exposure stood at 64 per cent in the previous financial year.

However, the one-year return for shareholders fell to 5.81 per cent amid global market volatility, with the steepest drops seen in technology stocks that have suffered bouts of sell-offs from China to the United States.

The one-year return is down from 24.53 per cent in the financial year ended March 31, 2020. The financial year 2020 returns were Temasek's highest since 2010, when returns stood at 43 per cent.

Ten-year returns came at 7 per cent and 20-year returns at 8 per cent.

Temasek chairman Lim Boon Heng said: "Our world today is immensely complex. The challenges faced by governments, businesses and society have never been so multi-dimensional or far-reaching.

"While the future remains unpredictable, we recognise that there are tremendous opportunities for us to work together to overcome global challenges."

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Temasek's investments benefit Singaporeans through its Net Investment Return Contribution (NIRC) to the annual Budget.

Under the NIRC framework, the Government can spend up to half of the long-term expected investment returns generated by Temasek, sovereign wealth fund GIC and the Monetary Authority of Singapore - the three entities tasked to invest Singapore's reserves.

Given the impact of repeated episodes of global market volatility on listed assets, Temasek said it has increased its exposure to unlisted assets to 52 per cent of its portfolio, up from 45 per cent in the past.

The company said returns on its portfolio of unlisted assets over the past 20 years have exceeded those of listed assets.

The financial sector remained Temasek's top exposure, at 23 per cent, but the transport and industrials sector replaced technology, media and telecoms (TMT) for the second place.

Eighteen per cent of its portfolio now comprises TMT assets, down from 21 per cent, while exposure to transport and industrials is up 22 per cent from 19 per cent.

This article was first published in The Straits Times. Permission required for reproduction.