Temasek adopted a cautious approach and slowed down its investment pace, with a net investment of $3 billion in the 12 months ending March 31.
Temasek Holdings Ltd, Singapore’s state investment business noted for its strong investment portfolio and stable financial performance, has reported a 5.07% decrease in its one-year total shareholder return in Singapore Dollars for the fiscal year ending March 31. According to reports, the company’s net portfolio value also experienced a dip, totaling S$382 billion ($284.77 billion) compared to S$403 billion in the previous year. This marks the first annual shareholder negative return for Temasek since 2020.
This downturn comes as no surprise, considering the challenging macroeconomic and geopolitical environment that has impacted global markets. Lim Boon Heng, Chairman of Temasek recently highlighted the challenging nature of the global market conditions in 2022.
Last year, global stock markets grappled with the challenge of sticky inflation, despite central banks implementing multiple rate hikes. Intensifying geopolitical tensions, such as those between the US and China, as well as the Russia-Ukraine conflict, added to market volatility and uncertainty.
Notably, the S&P 500 (INDEXSP: .INX) and MSCI Asia ex-Japan benchmarks both plummeted by around 20%. This slump reflects investor concerns about the impact of rising prices on corporate profitability and economic growth. Against this backdrop, Temasek’s decline in annual shareholder return appears relatively favorable, showcasing its ability to manage risks and mitigate losses.
The Singapore state investment arm maintains a diversified portfolio consisting of both public and private market investments. As of March 31, unlisted assets accounted for 53% of its portfolio, generating higher returns compared to listed assets.
Marking the unlisted portfolio to market would result in an estimated value uplift of S$18 billion. Additionally, Temasek has delivered robust long-term returns, with three-year, ten-year, and twenty-year total shareholder returns of 8%, 6%, and 9% respectively.
Temasek Cautious Investment Approach
Furthermore, Temasek disclosed a reversal of gains in its global direct investments in industries such as technology, healthcare, and payments, owing mostly to value derating in the higher interest rate environment.
Consequently, Temasek adopted a cautious approach and slowed down its investment pace, with a net investment of $3 billion in the 12 months ending March 31. Temasek made strategic investments in payment platform Stripe and IT security provider Kaseya, facilitating the acquisition of Datto, a provider of security and cloud-based software solutions.
Additionally, Temasek has bolstered its investment in Mastronardi Produce Ltd., a Canadian company that specializes in the cultivation and distribution of fresh produce grown in greenhouses. This move reflects Temasek’s confidence in the growth potential of the agriculture and food sector, driven by increasing demand for high-quality, sustainable produce.
Furthermore, Temasek has set a limitation on early-stage investments, limiting them to 6% of its portfolio. This metric demonstrates the company’s sensible risk management approach and recognition of the higher risks associated with early-stage enterprises.
In November, Temasek wrote down its $275 million investment in the bankrupt crypto exchange, FTX. Subsequently, the company implemented compensation cuts for the team responsible for recommending the investment and the senior management team.