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Temasek has also improved its methodology for calculating net market capitalisation of its portfolio to bring it more in line with its peers, using market multiples of comparable listed companies and other methods to assess the fair value of its unlisted assets.
According to this method, the market value of its portfolio is The company’s portfolio value stood at S$420 billion, compared to S$411 billion in the previous year.
The company typically uses the book value of unlisted investments, which make up 52% of the portfolio, taking impairments into account.
‘CAUTIOUS BUT SOLID’
The state investor had a net divestment of S$7 billion in the year ended March 31. It invested S$26 billion but divested S$33 billion.
About S$10 billion of divestment was due to Singapore Airlines repaying bonds and Pavilion Energy redeeming preference shares.
Temasek said it maintained a “cautious but steady” investment pace, influenced by expectations of a US recession (until the Federal Reserve shifts to a tighter monetary policy) and a slower-than-expected recovery from the coronavirus pandemic in China.
Its investment sectors include technology, financial services, sustainability, consumer and healthcare.
Ms Tan said Temasek has been considering four major structural trends when investing since 2016, which has helped the firm build a more resilient and forward-looking portfolio.
“Digitalisation and sustainable living have broad implications for various industries and business models. Future consumption and longer lifespans reflect shifting consumption patterns and meet the needs of a growing and ageing population,” she said.
These investments account for 39% of Temasek’s portfolio, up from 13% in 2016 when these trends were first identified.
Transportation and Industrials and Financial Services remain the two largest sectors in the portfolio.
Geographical prospects
The Americas accounts for 22% of Temasek’s portfolio, second only to Singapore at 27%.
The figures are roughly the same as the previous year, when the Americas were at 21% and Singapore at 28%.
The firm’s exposure to China fell from 22% of the portfolio to 19%. China drove returns in the firm’s portfolio from 2004 to 2014, but the market’s performance declined over the following decade.
Deputy CEO Chia Song Hui said China still faces structural challenges despite the government’s pro-growth stance. Temasek focuses on businesses that serve the domestic market, such as biotechnology, import substitution, electrification and the electric vehicle value chain.
“Some of these businesses have export potential, but given the geopolitical risks, we are really focusing on those that rely solely on the domestic market and less on exports to other countries,” he said.
“We have also been increasing our investments in India as we see more opportunities in consumer healthcare and financial services,” Ms Chen said.
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