Investment Approach and Portfolio Performance of Temasek
Key Points:
Portfolio Growth: The total value of Temasek’s portfolio increased by around 2% to SG$389 billion ($288bn) for the financial year ending March
Confidence in China: Temasek retains its cautious approach towards investing directly in China due to persistent structural economic issues.
Head to the U.S. first: The firm is focusing on investing in the United States, particularly among old-guard industries starting to adopt artificial intelligence for basic purposes.
Bright Outlook in Other Markets: Temasek is bullish about investment opportunities in the U.S., India, and Japan.
Investment Focus:
U.S. Market:
The S&P equal weight index is arguably overvalued with an overall valuation of 19 times earnings but trades at a more normal level relative to its long-term average when using price-to-earnings (16) and other metrics.
The investors’ portfolio exposure to the Americas is 22% (through Temasek).
Focus areas: Traditional sectors: Early AI adopters in traditional industries.
Chinese Market:
Indeed, given the structural bottlenecks in China and a lack of internal household demand for consumption.Internal_demand_pelletrecht_annotations_Null.gif
It is looking to sectors such as biotech, robotics and electric vehicles for domestic use.
Geopolitical risks are a risk and hence companies that have low influence of export revenue based market have been the focus;
Temasek’s portfolio, proportionate of which were Chinese assets slipped from 22% to 19%.
Japanese Market:
Market inmates and introductory all-time highs (hype) follow more foreign inflows
Results were boosted mainly due to corporate governance reforms and an uptick in private equity Activity.
Its exposure to Japan, which was close to nothing in the past several years has now grown to 1% of its portfolio.
Indian and European Markets:
Why the Company is So Drawn to India’s Large Domestic Market Supply Chain Flow Diversity
Green energy transition in Europe
Financial Performance:
Investments and Divestments:
The report forecasts that SG$26 billion will be invested across tech, financial services and healthcare sectors in 2024.
U.S. dominated, followed by India, and Europe gathered the most investment capital
SG$33 billion divested, net sold off SG$7 the previous year was a net investment of $4.
Portfolio Value:
This is up from SG$411 billion and mark to market net portfolio value now stands at S$420 bil. [Empasis made by editor]
Those unlisted assets comprise 52% of the portfolio, jumping from only 20% in 2004.
Returns:
One-year total shareholder return increased by 1.6%, bouncing back from a 5% fall in June to November last year
10 Years of Total Shareholder Return, Steady at 6%
20-year TSR fell a bit to 7% from 9%.
Strategic Insights:
Private vs. Public Assets:
While we do not have a target unlisted, listed split Temasek seeks to create one of the things they look for is Unifocal hence having a diversified set of aides in this.
Finally, private assets are viewed as having an advantage in terms of better access to companies and the ability for owners to work directly with portfolio businesses.
The strategic bend of Temasek sheds more light on the intense interest in the U.S. market, with an approaching warning note related to China and a dig for opportunities in Japan and elsewhere regionally. It is working on a portfolio that incorporates an equilibrium in the mix between private and public assets to provide consistent growth and conducive to changing markets.