Temasek’s exposure to China rose to 29% of assets as of March 31, compared with 24% in Singapore, its lowest exposure to the domestic market because the company was founded in 1974. The company’s largest local holdings, from Singapore Telecommunications to DBS Group Holdings, have seen their valuations fall this 12 months as Covid-19 has hit global markets.
The investment giant is increasing its assets in China despite the growing political and economic risks of a split from the United States. Its China holdings, which include stakes in Industrial and Commercial Bank of China and Meituan Dianping, amount to 17% in North America and 10% in Europe.
“We are optimistic about China in the medium term,” said Yeoh Keat Chuan, senior managing director of business development, adding that he expected government stimulus to support economic recovery and employment.
In August, BlackRock and Temasek received approval to jointly construct an asset management business in China with China Construction Bank, the newest in several moves by the Singaporean investor within the financial services sector within the country.
Other Chinese holdings include a stake in Alibaba-linked Ant Group, which is ready to list in Hong Kong and Shanghai this 12 months, in search of a valuation of $225 billion, based on people acquainted with the matter. Alibaba can also be the parent company of South China Morning Post.
“We are pleased to be part of their journey,” said Chin Yee Png, Temasek’s deputy chief financial officer, who declined to comment on the IPO.
“We like what they’re doing in the Chinese financial services space, providing inclusive financing to a large segment of the population that may not have had access to credit before,” Png told reporters at a briefing on Tuesday. “Ant has quite a lot of potential going forward.”
Geopolitics is believed to be one reason the state-owned investor decided to swap half of its Alibaba stake from U.S. shares to Hong Kong-listed stocks – a move that has also been taken by several major investors to cushion the potential impact of sanctions on the e-commerce giant.
Temasek has a big amount of money on its balance sheet but might be “selective” in making investments given the present uncertainty, Png added. She said its recent investment in BlackRock is an example of the form of deal they’re in search of.
Temasek in July reported its worst performance since 2016, shrinking its portfolio by 2.2 per cent within the financial 12 months ended March 31. The net value of the portfolio fell to S$306 billion ($224 billion) from S$313 billion a 12 months earlier.
The state-owned investor was on the right track to post a positive return in the primary three quarters, however the coronavirus pandemic caused global markets to crash in March. Many public stocks have since rebounded, though any gains might be included in the corporate’s fiscal 2021 results.
Temasek International Chief Executive Officer Dilhan Pillay had earlier said the market rebound ought to be viewed with caution as “COVID-19 normalcy” is more complex for investors, coupled with lower yields and geopolitical uncertainty.
Financial services investments were the biggest component of its portfolio, accounting for 23 percent of assets. About 48 percent of its holdings are in unlisted assets, up from 42 percent last 12 months, with a lot of the rest in listed stocks. The firm increased its stakes in PayPal, Visa and Mastercard. New technology investments included Duck Creek Technologies within the U.S. and Kuaishou Technology and MiningLamp in China.
Heliconia Capital Management has also been in talks to offer financial support to local shipping line Pacific International Lines, which is struggling resulting from a drastic decline in global trade.
Temasek is almost all shareholder in Singapore Telecommunications, whose shares have fallen by a 3rd this 12 months. It can also be the biggest investor in DBS, Singapore’s largest bank, whose shares have fallen by about 20 percent within the 12 months.
Not all of Temasek’s deals have survived Covid-19. Last month, it withdrew a Singapore-$4 billion bid for a majority stake in Keppel after the rig builder reported a second-quarter loss that was large enough to trigger a fabric opposed change clause.
