Singapore state-owned investor Temasek has reported a net portfolio value (NPV) of S$389 billion ($288 billion) for the financial year ended March 31, 2024, up S$7 billion ($5.18 billion) from a year ago.

Temasek said in a statement on Tuesday that the increase was mainly due to its investment returns from the United States and India, offset by the underperformance of China’s capital markets.

According to the statement, marking its unlisted portfolio to market would provide S$31 billion ($22.96 billion) of value uplift and bring the firm’s mark to market (MTM) NPV to S$420 billion ($311 billion), up S$ 9 billion ($6.66 billion) from last year’s MTM NPV.

Meanwhile, the firm’s unlisted portfolio has grown steadily from 20 percent in 2004 to 52 percent as at March 31, 2024.

The firm’s 20-year and 10-year total shareholder return (TSR) remained stable at 7 percent and 6 percent, respectively.

The firm maintained a cautious but steady investment pace amidst global economic uncertainties.

According to the statement, it invested S$26 billion ($19.25 billion) into opportunities in sectors such as technology, financial services, sustainability, consumer, and healthcare, aligned with the four structural trends of digitization, sustainable living, future of consumption, and longer lifespans.

Excluding Singapore, the United States continued to be the leading destination for the firm’s capital, followed by India and Europe.

The firm has also stepped up its investment activities in Japan.

Meanwhile, the firm divested S$33 billion ($24.44 billion) for the year.

Of this, about S$10 billion ($7.41 billion) was due to the redemption of capital by Singapore Airlines and Pavilion Energy for their mandatory convertible bonds and preferential shares respectively.

Overall, the firm had a net divestment of S$7 billion ($5.18 billion), compared to a net investment of S$4 billion ($2.96 billion) a year ago.

The firm continued to maintain a high level of liquidity, ending the year in a net cash position.

According to the firm, the global economy has been more robust than expected.

However, there are risks on the horizon, with geopolitical tensions are a key concern, primarily centered on US-China relations, and the wars in Ukraine and Gaza.

In the United States, Temasek said an unclear inflation path, a resilient labor market, and continued growth suggest that the Federal Reserve may leave policy rates higher for longer.

If inflation is more persistent than expected, it said the odds of further hikes may increase which may result in headwinds to financial markets.

Temasek noted that the Eurozone economy is recovering, with domestic consumption supported by credit and real wage growth.

It said energy transition presents opportunities to invest in quality businesses that benefit from increased capital expenditure in green technologies.

However, it is watchful of downside risks in the form of a less supportive fiscal impulse, as well as political shifts in the region.

Temasek also said China’s pro-growth policy stance has aided recovery, though structural challenges remain.

Without a pickup in domestic demand, it said growth and inflation in the country will continue to face downward pressure.

India, on the other hand, has continued to see strong economic momentum alongside improving macro and political stability, said Temasek.

It expects growth to remain firm over the next two years, primarily driven by infrastructure-led capital expenditure, accelerated supply chain diversification, and a recovery in private consumption.

Singapore’s open economy is also expected to benefit from external growth and continued recovery in the global goods cycle, according to Temasek.

However, it noted that geopolitical events and disruptions in global trade and supply chains pose risks.

The firm said the top-of-mind issues we have identified since 2021 – a challenging economic environment, geopolitical tensions, rising protectionism, the climate crisis, cyber risks, and the rise of Industry 4.0 — continue to prevail.

Against this backdrop, the firm said it will remain disciplined in its investment approach guided by the four structural trends, especially in opportunities in green transition and artificial intelligence (AI).

It said the firm’s strong liquidity position allows them to take advantage of market dislocations and investment opportunities, as and when they arise.

It said the firm will also continue to engage its portfolio companies to set expectations and drive value creation.

“Amidst global uncertainties, we maintained a cautious but steady investment pace, building a resilient and forward-looking portfolio,” said Chia Song Hwee, Deputy Chief Executive Officer, Temasek.

According to him, over the last decade, the firm has doubled its exposure to the United States and Europe, and increased its investments in India.

“However, our returns have been offset by the underperformance of China’s capital markets over the last three years. Overall, our portfolio remains anchored in Asia,

“With our strong liquidity position, we are ready to capture market opportunities aligned with the four structural trends and take advantage of market dislocations,” he added.

Png Chin Yee, Chief Financial Officer of Temasek, said that over the decade, the firm’s unlisted assets have generated returns of 9 percent per annum, outperforming its overall portfolio and adding to the resilience of its long-term returns.

Connie Chan, Head, Financial Services, Temasek, said that the long-term structural trends that have pervasive impact across sectors, business models and consumption patterns will continue to guide the firm’s portfolio construction.

“We will also continue to seek investment opportunities aligned to the green transition as well as those arising from the application of AI to further grow and strengthen the resilience of our portfolio,” she added.

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