SINGAPORE - Volatile stock markets took their toll on Singapore investment firm Temasek Holdings' portfolio value which shrank for the first time since the global financial crisis.
Its net portfolio value fell to S$242 billion for the financial year ended March 31, down from S$266 billion a year ago.
Its one-year total shareholder return came in at a negative 9.02 per cent, reflecting share price declines of its listed investments, the firm said on Thursday (July 7) in its annual review.
Temasek noted that it ended the year in a net cash position.
For the 12 months to March 31, Temasek continued to be an active investor, with S$30 billion in investments while divesting a record S$28 billion of its portfolio as it reshaped its portfolio to make it more resilient.
"The record divestment reflected in part our plan to reshape our portfolio, in line with what we saw were the longer term trends, such as in the financial, life sciences or digital space," said Mr Lee Theng Kiat, executive director and chief executive of Temasek International.
Mr Lee added that the firm sees a more volatile market with a more challenging environment ahead.
"Meanwhile, we are quite comfortable with the resilience of our portfolio. This gives us a lot of flexibility in addressing some of the longer term opportunities that we are seeing," Mr Lee said in the statement.
The United States accounted for the largest share of its new investments during the year, followed by China.
Temasek increased its position in the US logistics sector via a US$450 million (S$608.6 million) investment in commodity and specialty chemicals distributor Univar, and continued to invest in the biotechnology sector through investments in Alexion and Regeneron.
China accounted for the largest share of Temasek's investments in Asia, with holdings in Zhongce Rubber and Cainiao, as well as bigger stakes in Industrial and Commercial Bank of China and Postal Savings Bank of China.
In terms of geography, Asia continued to dominate. Excluding Singapore, Asia made up 40 per cent of Temasek's portfolio. This was followed by Singapore at 29 per cent, North America at 10 per cent and Australia and New Zealand at 9 per cent.
Europe accounted for 8 per cent of its portfolio. On Brexit, Temasek said the impact was "fairly modest". It exposure to the UK itself is relatively small and primarily through Standard Chartered Bank.
By sector, Temasek's holdings in telecommunications, media and technology rose to 25 per cent as of end-March, from 24 per cent a year ago. This sector overtook the financial services sector in its portfolio to become the largest sector in terms of portfolio value.
Its exposure in the financial services continue to moderate, falling to 23 per cent from 28 per cent, while transportation and industrials rose to 18 per cent from 17 per cent.
Within financial services, Temasek continued to expand into non-banking sub sectors, including am investment in PayPal. It also actively invested in smaller but fast growing technology-enabled companies, such as SoFi and C2FO in the US, Funding Circle in Britain and BillDesk and Policy Bazaar in India.
Looking ahead, Temasek noted that the US economic recovery is largely on track, albeit with modest growth. It also expects China to transit successfully to a more sustainable growth path in the medium term.
It added however that Britain's vote to leave the European Union has softened the short term outlook in Europe.
"Equity markets around the world will remain susceptible to bouts of volatility in the short to medium term," said Michael Buchanan, Temasek's head of strategy and senior managing director of portfolio strategy and risk group. "There is increased uncertainty, partly reflecting the ongoing hangover from the excesses that helped cause the global financial crisis."
He added that this suggests an environment of lower returns in the years to come. However, Mr Buchanan said the firm is "well positioned financially to address both the opportunities and challenges for the longer term".