Singapore’s sovereign wealth fund Temasek Holdings has suffered a loss in its global portfolio value for the first time since the global financial crisis in 2009. In the review report released by the state fund, the decline has been attributed ‘largely due to the fall in market values of our listed holdings.’
The portfolio value dropped by 9.02% and amounted to $242 billion in FY 16 against a valuation of $266 billion last year. Temasek witnessed its net investments decline to the lowest level in seven years as its divestments rose to a record S$28 billion, gross investments at S$30 billion were same as the previous year. Though, its net profit over the past year fell 43 percent to $8.0 billion.
Temasek International’s executive director and CEO Lee Theng Kiat said,
We saw the liquidity-driven market rally earlier in the year, and took the opportunity to step up our divestment pace, relative to the past few years. The record divestment reflected in part our plan to reshape our portfolio, in line with what we saw were the longer-term trends, such as in the financial, life sciences or digital space.
Equity markets worldwide fluctuated last summer as Beijing announced a shock devaluation of its yuan currency. Temasek cautioned the outlook was still tough, with the U.S. economy heading for a modest growth path while China continues to see slowing expansion. Europe’s growth outlook has been dented by the UK’s surprise vote last month to leave the European Union, it said.
The equity markets around the world will remain susceptible to bouts of volatility in the short to medium term. There is increased uncertainty, partly reflecting the ongoing hangover from the excesses that helped cause the Global Financial Crisis. This suggests an environment of lower returns in the years ahead. However, Temasek is well positioned financially to address both the opportunities and challenges for the longer term.
said Michael Buchanan, Temasek’s Head, Strategy and Senior Managing Director, Portfolio Strategy & Risk Group.
The external environment will remain quite challenging for Singapore given its intimate links to global trade and demand, Temasek remarked in a statement. However, Singapore’s openness also means exposure to both mature and growth economies, which can provide opportunities for a balanced growth in future, it added.
Based in Singapore, Temasek’s total shareholder return since its inception in 1974 was 15% compounded annually. Supported by 10 offices globally, its portfolio comprise telecom groups like SingTel, Singapore Airlines and banking giant China Construction Bank.
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