Singapore investment firm Temasek Holdings has reported a net portfolio value of $381 billion for FY2021 ending March 31, 2021, up $75 billion, or 24.5%, from $306 billion last year.
Group profit surged over 500% to hit $57 billion from just $9 billion in FY2020, reversing two consecutive years of declining profits in FY2019 and FY2020.
Temasek’s one-year total shareholder return (TSR) was 24.53%, while TSR since its inception in 1974 was an annualised 14% over 47 years. Its 20-year and 10-year TSRs were 8% and 7% respectively, compounded annually.
In a sign of how Temasek is behaving more like an active manager than a passive dividend collector, during the year, it invested $49 billion and divested $39 billion -- record numbers on both counts. This is compared to the FY2020 investment and divestment figure of $32 billion and $26 billion respectively.
In a release on July 13, Temasek says FY2021 was an “active year” and highlighted that it invested “to stimulate innovation and growth as we repositioned our portfolio for a changing world”.
Across countries, Temasek’s portfolio is mostly exposed to Asia, with China (27%) and Singapore (24%) making up its two largest markets.
Exposure in the Americas (20%) and Europe, Middle East & Africa (12%) is mostly through its direct investments. Temasek elaborated that the Americas accounted for the largest share of new investments made during the year, followed by Singapore and China.
Furthermore, underlying exposure to developed economies has increased to about 60% over the last 10 years, encompassing Singapore, North America, Europe, Australia & New Zealand, as well as Japan and Korea.
Riding on structural trends such as a growing middle-income population and a thriving Internet economy, Temasek has stepped up its exposure to Southeast Asia, particularly within the e-commerce sector.
It invested in e-commerce companies Sea Limited, the New York Stock Exchange-listed parent company of Shopee; and the Indonesia-based Tokopedia, which has since merged with ride-hailing app Gojek to form GoTo Group.
The technology, financial services, industrials and energy sectors continued to see significant investment activity from Temasek, with financial services (24%) and telecommunications, media and technology (21%) forming the two largest sectors in its portfolio.
Some notable foreign investments include the US-based online entertainment platform Roblox and German biotechnology company BioNTech, which was one of the first to create a Covid-19 vaccine together with Pfizer.
At home, Temasek was involved in Singapore Airlines’ capital raising in 2020 and 2021, amid major financial challenges due to the Covid-19 pandemic. Temasek owns a 55.75% stake in the flag carrier.
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The investment firm also invested in Sembcorp Marine as it demerged from Sembcorp Industries, and is also committed to participate in the rights issues of Olam International and Sembcorp Marine. Both deals were announced after March 31, 2021, in Temasek’s current financial year.
Global outlook
Looking ahead, Temasek believes the global economy will recover steadily, thanks to accommodative fiscal and monetary policy.
However, the pace of recovery across countries will be uneven as some suffer from new spikes in infections while others struggle with slow vaccination rates. Furthermore, new Covid-19 variants and ongoing trade tensions between China and US are adding to the uncertainty.
In any case, the US should continue to see strong growth, boosted by fiscal stimulus, resilient private consumption, and a return to pre-pandemic normalcy due to its pace of vaccinations. “Upside inflation risks are likely to be moderate, but still bear watching,” says Temasek.
On the other hand, Temasek notes that China’s economy remains ahead of others in the recovery cycle. “Policy has normalised from a loose stance earlier, and remains largely neutral for now. Despite higher commodity prices, it is unlikely to tighten sharply.”
At home, Temasek believes the Singapore economy is recovering from the pandemic, with the manufacturing, financial and technological services sectors likely to remain resilient.
“Manufacturing should continue to benefit from strong external demand, particularly for electronic products,” says Temasek. “Domestic activity will gradually pick up, even though community cases may pop up from time to time, albeit with lower frequency as more people get vaccinated.”
The firm noted that even though community cases may pop up from time to time, this will be with lower frequency as more people get vaccinated.
Overall, Temasek is cautiously optimistic on the global economic recovery in the short to medium term, and it holds the goal to “sustain our performance, generate risk-adjusted returns over the long term and mitigate climate risks”.
