Singapore's Temasek reports worst returns in 7 years

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Singapore state investor Temasek Holdings reported its worst returns since 2016 and warned it has slowed investment amid recession risks, higher interest rates and geopolitical tensions. Temasek, one of the largest and most active investors globally, said the net value of its portfolio had fallen to S$382 billion (US$285 billion) in the fiscal year to March, as prices fell. Public and private equity capital markets and the technology sector were hit particularly hard. That compared with a record value of $403 billion in 2022. The AS$7 billion loss was driven by market accounting. The Asian investor, which has two-thirds of its portfolio in the region and has backed some of the world's biggest startups, from Jack Ma's Ant Group in China to the San Francisco and Dublin-based payment processing group, Stripe, reported 5.07 percent. decline in total shareholder return.

The results underscore global investors' struggle to adapt to a new era of higher interest rates. Temasek's cost of capital increased from 7 to 9 percent. Their total returns over a 10- and 20-year period were 6 percent Job Function Email Database and 9 percent, respectively. The drop in returns was the weakest annual performance since 2016. Investment returns from Temasek and sovereign wealth fund GIC, as well as the Monetary Authority of Singapore, the central bank, are the biggest contributors to Singapore's budget. “The global economy remains quite fragile. Geopolitical tensions are high and show no signs of easing. Inflation is high in most developed markets. . . We believe that to control inflation, we probably need to see a recession,” said chief investment officer Rohit Sipahimalani. Temasek, whose unlisted holdings have grown substantially over the past decade to more than 50 percent of its portfolio, had some high-profile setbacks during the year.



He was forced to write down his $275 million investment in the collapsed crypto exchange FTX. Chief executive Dilhan Pillay acknowledged the extensive reputational damage the investment had caused but described it as an “aberration”. Sipahimalani said Temasek was moderating the pace of its investments and applying a “geopolitical lens” to its deals. “We will not invest in areas that are in the crosshairs of tensions between the United States and China. “We will prefer to invest in companies that have access to large national markets.” Management said it still saw long-term opportunities in China in sectors linked to domestic consumption and electric vehicles, but its growth outlook was uncertain. “We expect that [government] stimulus will be much lower and much more modest than what we have seen historically,” Sipahimalani said.