Temasek portfolio value reaches record high, says US risk has likely peaked
Singapore's Temasek, the state-owned investor in Singapore, reported on Wednesday a 11.6% increase year-on-year to S$434 Billion ($340 Billion) and that risks related to U.S. immigration policies and tariffs and fiscal tightening had probably peaked.
On Monday, U.S. president Donald Trump began a new phase in his trade war by telling allies - from major suppliers like Japan and South Korea down to smaller players such as Malaysia - that they will be facing higher tariffs starting August 1.
In a recent briefing, Temasek’s co-head of corporate strategy Lim Ming Pey said: "We must continue to monitor the developments in tariffs over the coming weeks and months."
Rohit Sipahimalani, Temasek’s chief investment officer, said that tariffs would not return to levels seen during Trump’s “Liberation Day” on April 2. He also noted that some risks had been reduced with the passage by Trump’s sweeping tax cut and spending bill.
Sipahimalani stated that "generally speaking, the slowdown of growth we're experiencing right now due to tariff uncertainty should be reversed towards the end the year. This is especially true as the Fed reduces rates, more deregulation occurs, and tariffs are more clearly defined." The challenge in the U.S. lies with valuations.
Lim did say that Temasek still saw "brightspots, such as U.S. world-class AI capabilities, which will have an impact on all sectors."
Temasek said that the U.S. remains the top destination for its capital. At the end of the financial year, on March 31st, the Americas accounted for 24% of Temasek's portfolio compared to 22% a year earlier.
Temasek’s net portfolio value increased for the second year in a row, largely due to the performance of listed Singaporean companies, as well as direct investments made in China, India, and the United States.
Temasek believes in China's longer-term prospects, Lim stated. As of end-March 2018, China was Temasek’s third largest market by underlying exposure, at 18%. This is after Singapore (27%), and the Americas (24%).
She added, "We see opportunity in the green economy and in life sciences innovation. We also see it in leading brands that continue to grow and scale in a resilient way."
Temasek stated that it would be increasing its focus on investing into companies with stable earnings and cash flow, and also access to large markets within Singapore, which are more protected from geopolitical and tariff risks. The company is also focused on artificial intelligence and infrastructure.
Chia Song Hwee is Temasek’s deputy CEO. "We don't just invest ourselves; we also invest in AI related funds," he said. Temasek has invested in companies like Nvidia Databricks, Veam and Databricks.
According to BlackRock's June investor day slides, it recently joined a consortium backed Microsoft, BlackRock, and tech investment firm MGX in order to expand AI infrastructure and invest.
(source: Reuters)
