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How Singapore fund made $22.9b in 12 months

The rise in Temasek’s profit come as investors worldwide are grappling with inflated valuations and sluggish growth

  • Chia Song Hwee, president at Temasek International during the company’s annual review in Singapore.Image Credit: Bloomberg
  • Marina Bay Sands with its lotus-shaped ArtScienceMuseum and spectacular hotel offers entertainment, culture, sImage Credit: Supplied picture
  • The Singapore skyline reflects the modern financial hub it is. Image Credit: Supplied picture
Gulf News

Singapore: Temasek Holdings Pte’s one-year return rebounded on rallying stocks even as the Singapore state investment firm expressed caution on the global outlook.

The value of Temasek’s portfolio gained 13 per cent to a record S$275 billion (Dh731 billion; $199 billion) — as of March 31, the firm said on Tuesday.

The fund posted earnings of some US$22.9 billion, roughly $1.9 billion per month, or about $62.7 million daily. 

The fund's one-year earnings were roughly equivalent to the annual tax revenues of countries like Bangladesh ($23.8b) or Croatia ($21.4b) — and more than half of the total taxes collected by neighbouring Philippines ($45.5b), based on 2016 figures. 

And the fund's performance was a reversal from a 9 per cent slide that was its worst performance since the global financial crisis.

“While the global recovery is gaining momentum, there are still uncertainties both in the medium as well as longer term,” said Chairman Lim Boon Heng, adding that the investor is well-equipped to take advantage of opportunities and weather shocks.

Valuations

Investors worldwide are grappling with inflated valuations and sluggish growth, with Singapore’s GIC Pte warning Monday the outlook may be challenging for as long as a decade.

Temasek took opportunities during the year to sell equities and pared back its new investments to about half the level of the previous 12 months.

The firm kept nudging up its proportion of unlisted assets, with the amount rising to 40 per cent.

The firm made S$16 billion in new investments in the 12 months ended March, down from S$30 billion in the previous year. Divestments totalled S$18 billion.

Returns for sovereign wealth funds (SWFs) have rebounded as global stocks rallied.

Japan’s Government Pension Investment Fund, the world’s biggest pension fund, returned 5.9 per cent in the year ended March 31, recovering from its worst performance since the global financial crisis.

GIC said Monday its nominal five-year annualised return in US dollars climbed to 5.1 per cent from 3.7 per cent.

Rebound

Temasek’s total shareholder return — compounded, annualised and including dividends — was 4 per cent for the past 10 years.

That compares with the annualised 4.8 per cent return for the MSCI World Index over the same period. Temasek’s return was 6 per cent for the past 20 years, and 15 per cent since the firm’s inception in 1974.

A comeback by UK lender Standard Chartered Plc helped boost Temasek’s performance, with the bank’s shares gaining 61 per cent after a battering the previous financial year.

Temasek is the biggest shareholder. Likewise, DBS Group Holdings Ltd., the largest lender in Southeast Asia, surged ahead and Temasek also benefited from Chinese banks’ gains, after a bloodbath the previous year.

Alibaba Group Holding Ltd., in which Temasek was one of the early investors, powered ahead. Gains were muted from the investment firm’s single most valuable holding: shares of Singapore Telecommunications Ltd. rose 2.6 per cent over the financial year.

“We have continued to rebalance our holdings towards longer term macro opportunities such as the transforming economies, as well as emerging new trends such as the digital enablers for new businesses,” Lim said.

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