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SINGAPORE: Temasek Holdings announced on Tuesday (September 8) a drop in the net value of its portfolio for the latest financial year, the first in four years, but said its balance sheet remains “resilient” and that it has the flexibility to rebalance your wallet accordingly. .
For the year ending March 31, the net worth of its portfolio fell to $ 306 billion, down 2.2% from the record of $ 313 billion it reached a year ago, according to its annual review. final.
Its one-year total return to shareholders, which takes into account all dividends distributed to shareholders minus capital injections, turned negative at -2.28 percent, compared to a profit of 1.49 percent ago. one year.
The last time Temasek saw a negative one-year return was in 2016, when declines in the share prices of its listed investments brought the rate down to -9.02%.
This figure had also fallen below zero during previous crises: it was around -30% in 2009 during the global financial crisis and around -19% amid the outbreak of severe acute respiratory syndrome (SARS) in 2003.
(Graphic: Review of Temasek 2020)
Ms Png Chin Yee, Deputy CFO and Head of Financial Services, told a virtual press conference that a year’s performance for shareholders should be viewed in the context of how global markets hit lows in the quarter to March 31 with the start of the COVID-19 pandemic.
When asked by the CNA if the rate of return could remain negative in the next financial year, he replied that global markets have recovered from their lows since late March. “So that should give you an indication of our position,” added Ms. Png.
Despite the decline in the last financial year, Temasek said that the value of its net portfolio has risen by 120 billion Singapore dollars in the last 10 years and has almost tripled from two decades ago.
Its 10-year total return to shareholders was 5%, while the 20-year equivalent was 6%, it said in a press release.
Figures released Tuesday as part of its final audited consolidated financial statements and portfolio performance were similar to the preliminary figures it announced in July. Citing disruptions amid the COVID-19 pandemic, Singapore’s state investment firm had delayed its regular annual report from July to September this year.
READ: Temasek portfolio value falls 2.2% amid COVID-19 pandemic
“The pandemic interrupted a promising end to our performance this year, but the resilience of our portfolio was evident to us,” said Yeoh Keat Chuan, senior managing director of the business development group and deputy director of its Singapore projects.
This resilience came down to Temasek’s “limited exposure” to the most affected travel, hospitality and entertainment sectors, Yeoh said at the same news conference.
“We finished the year with a solid and resistant balance. This gives us the flexibility to invest in the longer term, going through market dislocations and repositioning our portfolio for post-COVID-19 recovery, “he added.
PORTFOLIO BREAKDOWN
In its annual report, Temasek said it invested S $ 32 billion and divested S $ 26 billion in the last financial year.
Again, the United States accounted for the largest share of new investment, followed by China and Singapore.
Overall, Asia remained the anchor for Temasek’s portfolio at 66%, and China (29%) and Singapore (24%) remained the top two markets.
Temasek said it has continued to increase its exposure to North America (17 percent), where it sees opportunities in line with key structural trends. Together with Europe (10 percent), these two developed markets now make up more than a quarter of your underlying portfolio exposure.
Financial services (23 percent) continued to be the largest sector in its portfolio, with greater exposure to the payments sector and other non-bank financial services companies.
Temasek said it increased its holdings in PayPal, Mastercard and Visa, as well as invested in promising startups such as Blend, a US-based digital lending platform for mortgages and consumer banking.
Technology, life sciences and healthcare were other areas in which he invested.
In the technology sector, Temasek invested in Duck Creek Technologies, a US-based software provider for the property and casualty insurance industry, and in the European electronic market for ManoMano home improvement products.
In life sciences and health care, it invested in biopharmaceutical companies developing new drugs and therapeutic solutions such as Beam Therapeutics and Coherus BioSciences, based in the US.
In Singapore, it supported local cash-back platform ShopBack and plant-based meat alternative maker Growthwell Group.
These are longer-term growth opportunities that complement his exposure to Singapore’s top firms, as well as the efforts of his investment firm Heliconia Capital to help small and medium-sized companies scale beyond Singapore, he said.
MARKET OUTLOOK
Temasek said the outlook for the global market remains volatile and uncertain, with the resurgence of COVID-19 infections in some countries threatening to derail the recovery.
He also noted concerns about rising geopolitical and trade tensions caused by the strategic rivalry between the United States and China and the US presidential elections in November.
“The unpredictable trajectories of COVID-19 and geopolitical issues pose significant short-term uncertainties,” Ms Png said in the press release.
“We will remain vigilant and disciplined in our investment approach as we focus on building a portfolio that will benefit from the policy headwinds and is resilient over the long term.”
Despite the challenges, the pandemic has “amplified and accelerated” certain structural trends and one way for Temasek to shape its portfolio for the future is to “seek innovative companies at the forefront in developing new, sometimes disruptive, solutions. that create new opportunities. ” Said Mr. Yeoh.
Some of these trends include e-commerce and digital payments, which have seen an acceleration in recent months and are “here to stay,” said Ms Png, adding that this is why Temasek has taken the opportunity to dig deeper. your exposure in the payment space. .
She said: “What we’d like to do is really take a look at the trends we’ve identified, see what’s relevant, what’s accelerated, and place bigger bets against those that we think will benefit in this environment and come out of the closet. of this environment “.
SUSTAINABLE INVESTMENTS
Sustainability also remains at its core, according to Temasek, which said it closed the year carbon neutral as a company.
Temasek said it remains committed to halving net carbon emissions attributable to its portfolio by 2030, and Yeoh noted that the state investor will work closely with its portfolio companies in this area.
It is also committed to a long-term ambition of zero net emissions by 2050 for its portfolio.
Temasek President Lim Boon Heng said: “Ultimately, the purpose of companies is to provide sustainable solutions for a better world. Temasek is no different.
“We are an investor, an institution and a long-term manager. We must do things today, with the next two or three decades in mind ”.
Other questions raised at the virtual press conference include whether Temasek would consider another round of company-wide pay freezes.
It did so in February, when it also announced a “partial cut” in annual bonuses for its senior management team and a voluntary pay cut plan for top management.
READ: Temasek Freezes Staff Salaries, Top Management Will Take Partial Cut In Bonuses
Dilhan Pillay Sandrasegara, CEO of Temasek International, said the savings from these cost-cutting measures were used to support various COVID-19 initiatives in the community.
“Looking ahead, we have to monitor the situation to see what we should do with the remuneration of our staff and that is something we are paying close attention to,” he added.
“But it’s a bit early to say if we need to take any additional action, one way or another.”
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