Temasek's portfolio value falls 30% on-year to S$130b as of March 2009

By May Wong, Channel NewsAsia Posted: 17 September 2009 1551 hrs

SINGAPORE: The market turmoil last year and earlier this year has hit the returns of Singapore investment company Temasek Holdings. According to its latest annual report – the Temasek Review – its one-year total shareholder return (TSR) by market value came in at -30 per cent as of March 31, compared with +7 per cent the year before. Its portfolio value for the financial year to March 2009 fell 30 per cent 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. 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. But it said markets have since stabilised and its portfolio has risen 32 per cent since April to S$172 billion as at end-July. Closely followed benchmarks such as the MSCI World Index rebounded 25 per cent, while the MSCI Asia ex-Japan Index rose 42 per cent in the four-month period. 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.