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Temasek Chairman Lim Boon Heng remained cautiously optimistic of overall economic outlook despite a rocky 2015 for global financial markets
The Singapore government sovereign wealth fund, Temasek, revealed in its annual Temasek Review the overall net value of its fund had fallen by S$24 billion (US$17.8 billion) as of end-of-March 2016.
Besides the overall drop in value, Temasek divestments also rose by S$9 billion (US$6.67 billion) to a record S$28 billion (US$20.8 billion). Last year the company divested S$19 billion (US$14.1 billion).
The 2016 numbers created a S$2 billion (US$1.48 billion) positive difference between investments and divestments — in 2015 the difference was plus S$11 billion (US$8.16 billion). Since 2005, the only year divestments have surpassed investments was in 2009, amid the fallout of the global financial crisis.
Temasek Chairman Lim Boon Heng said the fund was rebalancing the portfolio towards longer term and emerging trends.
One year return to shareholders was negative 9.02 per cent.
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Lim acknowledged the less-than-stellar numbers overall and attributed the dip to a rocky year for the global financial markets.
“Increased volatility in the global equity markets, depressed commodities prices and rising uncertainty around policy toolkits and their effectiveness added to the muted outlook,” he wrote.
But, Lim said Temasek remains cautiously optimistic of the economic outlook, citing a recovering US economy and an expectation that China can manage its slowdown over the medium-term.
“Overall, we see positive underlying fundamentals in both mature and growth markets, though equity markets remain susceptible to bouts of volatility. China will grow more slowly but more sustainably, while energy prices are likely to be range bound,” he wrote.
The fund’s geographical tendencies remained about the same a years past.
The non-Singapore Asia investments have hovered at around 40 per cent for all three years (it is exactly 40 per cent this year). Singapore investments command 29 per cent with North America, Australia/New Zealand and Europe seeing 10, nine and eight per cent respectively. The Central Asia, Africa, the Middle East and Latin America made up the remaining 4 per cent of the dispersion.
In terms of money, this has meant a S$13 billion (US$9.6 billion) rise in Singapore exposure in the last ten years.
Role of tech
The sector of ‘Telecommunications, Media and Technology’ made up the highest percentage of the portfolio for the first time in the three years (2014-2016) listed in the review.
The segment surpassed ‘Financial Services’ and made up 25 per cent of the portfolio (Financial services was 23 per cent). In 2014 the ‘Telecommunications, Media and Technology’ industry was 23 per cent and in 2015 the number was 24 per cent. Financial services during that same time was 3o per cent (2014) and 28 per cent (2015) during those same years.
Other sectors are:
- Transportation and Industrials — 18 per cent
- Consumer and Real Estate — 17 per cent
- Life Sciences and Agriculture — 4 per cent
- Energy and Resources — 3 per cent
- Multi-sector Funds — 7 per cent
- Other (including credit) — 3 per cent
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In the report, Temasek made a point to mention startups on a few occasions. In one instance explaining itself as an facilitator across all stages of enterprise, saying,
“Temasek also plays an enabler role across all stages of enterprise, from startups to later stage companies, seeking out those with disruptive business models that are potential game changers and transforming existing businesses.”
It went on to outline specific startup investments, like that in AirBnB, Didi Chuxing, Alibaba’s Cainiao and PolicyBazaar from India.
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