Singapore state investor Temasek posts worst returns since 2016

Singapore’s state investment company Temasek recorded in 2023 its worst returns in seven years, weighed by a challenging macroeconomic and geopolitical environment.

Temasek posted a 5.07% decline in its one-year total shareholder return in Singapore dollars in the financial year that ended March 31, according to a statement released Tuesday. It was also Temasek’s first annual shareholder negative return since 2020.

Net portfolio value came in at $382 billion Singapore dollars ($284.77 billion), compared to S$403 billion a year ago. This was just its fifth one-year total shareholder negative return since 2003.

“2022 has been the challenging year for markets over the last decade,” said Lim Boon Heng, Chairman of Temasek Holdings in the statement. “Against a backdrop of restrictive macro policy, lower growth and a highly polarized geopolitical environment, the world is changing rapidly.”

Still, Temasek’s decline in annual shareholder return in 2022/23 compares relatively favorably with global stock market returns.

The S&P 500 and MSCI Asia ex-Japan benchmarks each plunged nearly 20% in 2022, roiled by sticky inflation despite multiple rate hikes by central banks. Intensifying geopolitical tensions such as U.S.-China tensions and the Russia-Ukraine war did not help.

The Singapore state investor is invested in both public and private markets. Unlisted assets comprised 53% of its portfolio as at March 31— generating higher returns in listed assets. Marking its unlisted portfolio to market would provide S$18 billion of value uplift, it said.

Its three-year total shareholder return stood at 8%, while its 10-year return was at 6% and 20-year return at 9%.

The confluence of multiple global events in the past year has raised the cost of capital and weighed on capital flows, the Singapore state investor said.

“It also had an impact on the pace of energy transition, in the face of greater demand for energy security and resilience,” it added.

Temasek said its global direct investments, particularly in the technology, health care and payments spaces, saw “a reversal of gains” in the 12 months ending March 31, as valuations de-rated in the higher interest rate environment.

Temasek said it consequently slowed down its investment pace in the past year, and adopted a cautious approach as liquidity tightened. It invested $23 billion, while divesting $20 billion, resulting in a net investment of $3 billion.

Still, Temasek said it made new investments in payments platform, Stripe, as well as IT security provider Kaseya. That investment in turn enabled its acquisition of Datto, a provider of security and cloud-based software solutions.

Temasek said it increased its stake in Mastronardi, a Canada-based company that cultivates and distributes fresh produce grown in greenhouses.

The Singapore’s state investor said it trimmed its portfolio exposure to financial services to 21% in 2022/23 from 23% the year before, It also increased its exposure to transportation and industrials to 23% from 22%. These two sectors are the largest in its investment portfolio.

Early stage investments are capped at 6% of its portfolio, Temasek said.

In November, Temasek wrote down its $275 million investment in bankrupt cryptocurrency exchange FTX. It subsequently cut compensation in May for the team that recommended its investment in the now-bankrupt FTX cryptocurrency exchange, as well as for its senior management team.