US Markets
Tuesday, July 9th, 2024 7:53 am EDT
Key Points
- Temasek will continue to allocate most of its investment capital to the U.S., focusing on traditional industries adopting AI, while also increasing investments in India, Japan, and Europe.
- The firm remains cautious about the Chinese market due to structural economic challenges and weak domestic demand, reducing its Chinese assets to 19% of its portfolio from 22% the previous year.
- For the 2024 financial year, Temasek invested SG$26 billion in sectors like technology, financial services, and healthcare, with its total portfolio value increasing to SG$420 billion, primarily due to its unlisted assets, which make up 52% of its portfolio.
Temasek, the state investment company from Singapore, plans to continue directing most of its investment capital to the U.S., focusing on traditional industries adopting AI, despite acknowledging the high valuation of the U.S. market. The U.S. comprises 22% of Temasek’s portfolio, which increased to SG$389 billion ($288 billion) in the financial year ending March. However, Temasek remains cautious about China due to structural economic challenges and weak domestic demand, although it recognizes the Chinese government’s pro-growth stance. Temasek’s strategy in China now targets sectors like biotech, robotics, and electric vehicles that drive domestic consumption and are less dependent on exports due to geopolitical risks. The firm’s investment in Chinese assets decreased to 19% of its portfolio, down from 22% the previous year.
Temasek is also increasing its investments in India, Japan, and Europe. India is attractive due to its large domestic market and supply chain diversification, while Japan benefits from corporate governance reforms, increasing private equity activities, and structural and cyclical tailwinds. Japan now represents 1% of Temasek’s portfolio, a notable rise from virtually no exposure a few years ago. In Europe, Temasek sees potential in the green energy transition.
For the 2024 financial year, Temasek invested SG$26 billion in technology, financial services, and healthcare. The firm’s unlisted assets, which constitute 52% of its portfolio, are marked to market, increasing the net portfolio value to SG$420 billion from SG$411 billion. This reflects Temasek’s advantage in the private investment space due to better access and collaboration with companies. Although Temasek does not set a fixed ratio for unlisted versus listed assets, it aims for a balanced portfolio with adequate liquidity.
Temasek’s one-year total shareholder return increased by 1.6%, rebounding from a 5% decline in 2023. However, the 20-year return slightly decreased to 7% from 9% due to the exclusion of the significant 2004 return post-SARS. Additionally, Temasek divested SG$33 billion during the financial year, resulting in a net divestment of SG$7 billion, contrasting with the previous year’s net investment of SG$4 billion.
For the full original article on CNBC, please click here: https://www.cnbc.com/2024/07/09/singapore-state-investor-temasek-to-focus-on-early-adopters-of-ai-in-the-us-cautious-on-china-.html
