SINGAPORE – State investor Temasek Holdings’one-year shareholder return fell into negative territory in its latest financial year, with its net portfolio value taking a dip from last year’s record high as well.
Temasek’s net portfolio was valued at $306 billion as at March 31, 2020, 2.2 per cent lower than last year’s record $313 billion, it said in its annual review on Tuesday (Sept 8).
Temasek’s final portfolio performance results, which confirm the preliminary figures released in July, reflected the impact of the coronavirus pandemic on global financial markets in the last quarter of its financial year.
Its one-year return for shareholders came in at -2.28 per cent, compared with 1.49 per cent the previous year. Over the longer term, its total shareholder return over 10 years was 5 per cent, down from 9 per cent a year ago.
The last time Temasek’s one-year return for shareholders was negative was in 2016, when it fell to -9.02 per cent on the back of declines in the share prices of listed investments.
Speaking to the media on Tuesday, Temasek noted that its one-year shareholder return was -29.6 per cent in 2009 during the global financial crisis, and -18.8 per cent in 2003 amid the severe acute respiratory syndrome (Sars) epidemic.
Temasek’s investments benefit Singaporeans through the Net Investment Return Contribution (NIRC) to the annual budget. Under the NIRC framework, the Government can spend half of the long-term investment returns generated by Temasek, sovereign wealth fund GIC and the Monetary Authority of Singapore – the three entities tasked to invest Singapore’s reserves.
Temasek’s annual review also showed that unlisted assets made up their highest-ever share of 48 per cent of its portfolio in the past financial year, as the investment firm continues to increase its exposure in non-listed companies.
Financial services remained the largest sector in Temasek’s portfolio at 23 per cent, as it increased exposure in the payments sector and other non-bank financial services companies to benefit from the acceleration in digitalisation of financial services.
In particular, it increased its investments in payment providers PayPal, Mastercard and Visa, and also put money in Blend, a United States-based digital lending platform for mortgages and consumer banking.
Temasek International chief executive Dilhan Pillay said that while the firm is watchful on the impact of the coronavirus pandemic, it is committed to a future of sustainable living.
“We recognise the urgent need for businesses with innovative solutions to improve lives and increase social resilience. This has led us to accelerate our investments into low-emission and resource efficient companies, including in the areas of energy, food, waste, water, mobility and urban development.”
In the past year, Temasek backed Singapore-based solar energy firm Sunseap, and increased its exposure to alternative protein firms such as Impossible Foods.
The firm also closed the year with carbon neutrality, and has committed to halve the net carbon emissions attributable to its portfolio by 2030.
In its annual report, chairman Lim Boon Heng noted the significant uncertainty and complexity ahead, and reaffirmed Temasek’s commitment to strengthening its capabilities and introducing new strategies to enable the firm and its portfolio companies to weather the storm and prepare for the future.
“We will continue to invest in our network to add value to others, even as we derive greater value from working together,” he said.
The technology and life science sectors were also areas where Temasek was active over the past financial year, capitalising on growth trends in these areas.
Among its tech investments were Duck Creek Technologies, a US-based software provider to the property and casualty insurance industry, and Chinese data solutions firm MiningLamp.
Meanwhile, it also backed firms in the life sciences and healthcare industry, such as integrated healthcare system CareBridge, and bio-pharma companies developing drugs and therapeutic solutions like Transcenta.
Geographically, Temasek stayed anchored in Asia, with the region accounting for 66 per cent of its underlying assets, unchanged from last year. China and Singapore remained the top two countries by concentration, at 29 per cent and 24 per cent respectively. But the investment firm also continued to grow its portfolio in North America (17 per cent), “where we see opportunities in line with key structural trends”.
Temasek invested $32 billion over the year and divested $26 billion of assets over the year.
Looking ahead, the unpredictable paths of Covid-19 and geopolitical issues pose near-term challenges, said Temasek deputy chief financial officer and head for financial services Png Chin Yee.
“We will stay watchful and remain disciplined in our investment approach, as we focus on building a portfolio that will benefit from policy tailwinds and is resilient in the long term,” she said.
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