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18 September 2009

Singapore’s Temasek posts 30% decline in portfolio value

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The market turmoil last year and earlier this year has hit the returns of Singapore investment company Temasek Holdings, reported city-state’s broadcaster and online news website the Channel News Asia.

The report, quoting the firm’s latest annual report – the Temasek Review, as saying its one-year total shareholder return (TSR) by market value came in at -30 percent as of March 31, compared with +7 percent the year before.

Its portfolio value for the financial year to March 2009 fell 30 percent on-year to S$130 billion. This means the portfolio has shrunk back to levels seen three years ago when its value was worth S$129 billion (1$=1.5 S$).

It is also the first time that its TSR has been negative and its portfolio value has dropped since the Temasek Review was published in 2004.

However, Temasek said its TSR since inception in 1974 by both shareholder funds and market value held steady at 16 per cent.

Despite the global credit crunch, Temasek said it remained cautiously active in the market, making S$9 billion of investments and S$16 billion in divestments during the year.

As for the group's net profit, Temasek raked in S$6 billion as of end-March this year, down two-thirds compared to last year. The company said the decline reflected the generally weaker operating performances of its portfolio companies.

At a news conference on Thursday, Temasek said the markets have stabilised, helping its portfolio increase 32 per cent since end-March to S$172 billion as at end-July.

Ho Ching, executive director and CEO, Temasek Holdings, said: "There'll be some medium-term risk, but I think we have the full flexibility to do what we need to do and we have full flexibility today to think of what we should do for the long term, rather than be constrained. So as far as we're concerned, we're in a fairly comfortable position.

Looking ahead, Temasek said the worst of the meltdown risks is over, but it expects risks of inflation and asset misallocations in the medium term. It added that structural issues still need to be resolved due to continued deleveraging.

However, the sovereign wealth fund remains optimistic about Asia's potential for the long term and has maintained an "overweight" call on the region. As of end-March this year, its exposure to Asian markets stood at 43 per cent, while its Singapore exposure was 31 per cent.

The Organisation for Economic Co-operation and Development (OECD) economies accounted for just over 20 per cent of its portfolio and new markets like Latin America and Russia made up four per cent.

Temasek had said in the past that it aims to keep 40 per cent of its investments in Asia, 30 per cent in Singapore, 20 per cent in the OCED countries and 10 per cent in Latin America, Eastern Europe, the Middle East and Africa.


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