Signage for Temasek Holdings is displayed during a news conference following the company’s annual review in Singapore on July 9, 2019.
Bryan van der Beek | Bloomberg | Getty Images
SINGAPORE – Temasek Holdings announced on Tuesday that the net worth of its portfolio had risen to $286.48 billion (S$403 billion) at the end of March, up S$22 billion from the previous year, surpassing the record from last year.
Still, the public investor warned that the outlook for the global economy remains in a “fragile state”.
“Amid the uncertainty of global markets, we have been steadily investing and divesting to seize opportunities aligned with long-term structural trends,” Temasek said in a statement. “We aim to build a resilient and forward-looking portfolio, with sustainability at the heart of everything we do.”
In its annual report released on Tuesday, Temasek said the one-year shareholder return was 5.81% in Singapore dollars. Returns for the 20-year and 10-year were 8% and 7% compounded annually, respectively, the company added.
During the year, the company invested S$61 billion and disposed of S$37 billion.
Geopolitical uncertainties coupled with “rising inflation, soaring commodity prices and severe supply chain bottlenecks have exposed new rifts in the global market”, Temasek said.
Given the “likelihood of a recession in developed markets over the next year, we maintain a cautious investment stance while remaining focused on building a resilient portfolio supported by the structural trends we have identified,” said Rohit Sipahimalani, investment director of Temasek.
Over 60% of Temasek’s portfolio is in Asia, with Singapore accounting for 27% and China 22%.
China could struggle to meet its 5.5% growth target for 2022, given its weak growth so far this year, Temasek said.
“Political agencies are likely to maintain a supportive stance to cushion headwinds from soft real estate activity and pandemic restrictions,” the report notes.
As for the Singapore economy, the Singaporean investor expects the expansion to be slower than expected.
“While the reopening of the pandemic will facilitate a stronger recovery in the domestically oriented and travel-related sectors, growth prospects for Singapore’s outward-oriented economy will be weighed down by the global backdrop and a downside risk. in developed markets,” Temasek said.
In the United States, the labor market remains tight and inflationary pressures continue to be strong, the report adds.
Given the tightening of financial conditions and elevated geopolitical uncertainty, “growth is expected to slow significantly and below trend, raising the risks of a recession through 2023,” Temasek said.
During the year, Temasek intensified its efforts to invest in climate-related opportunities and encouraged decarbonization efforts in companies.
In June, she established GenZero – an investment platform company wholly owned by Temasek – which seeks to deliver positive climate impact as well as long-term sustainable financial returns.
It has also invested in Ambercycle, a Los Angeles-based materials science company that uses new molecular separation technologies to recycle virgin-grade polyester textiles. Temasek also increased its exposure in Solugen, a sustainable chemical start-up working to decarbonize the chemical industry.
The public investor said it continues to engage with its portfolio companies to build its leadership capacity in sustainability and climate transition management.
For example, Singapore Airlines is working on a pilot project with the Civil Aviation Authority of Singapore to use sustainable aviation fuel on SIA and Scoot flights. Separately, Sembcorp Industries hopes that by 2025 the company will be able to grow its sustainable solutions portfolio to contribute 70% of the group’s net profit, Temasek said.