Global economic growth and booming share markets helped Temasek Holdings hit record numbers last year, but it warned that near-term risks are on the horizon.
The investment firm reported yesterday that its net portfolio value hit a new high of $308 billion in the 12 months to March 31 - the first time it had exceeded $300 billion, and up $33 billion from a year earlier. Its one-year total shareholder return was 12.19 per cent.
Mr Lee Theng Kiat, Temasek International's executive director and chief executive, said in a statement: "We continue to reshape our portfolio in line with our views of key long-term trends.
"This ongoing active investment stance is focused on solutions for a better, smarter and more connected world over the medium to long term."
The buoyant numbers, which were outlined in the Temasek Review for the financial year, were bolstered by strong gains among key investments including DBS Group Holdings, Ping An Insurance and Alibaba Group Holding.
But Temasek warned that the pace of new investments could slow in the year ahead given that global growth is expected to moderate amid a riskier environment. "Given the market outlook, we may recalibrate and slow our investment pace over the next nine to 18 months," said Mr Alpin Mehta, managing director of investment.
During the year, Temasek invested $29 billion and divested $16 billion. The United States accounted for the largest share of new investments in the 2018 financial year, followed by China and Europe. The Americas and Europe now combine to make up almost a quarter of the portfolio, behind Singapore's 27 per cent and China's 26 per cent.
Since 2011, Temasek has been increasing its focus in the technology, life sciences, agribusinesses, non-bank financial services and consumer sectors. Those sectors accounted for almost half or $13 billion of new investments last year. Its exposure in these industries now totals $80 billion, or 26 per cent, of the total portfolio.This is up from $9 billion, or 5 per cent, of a smaller portfolio in 2011.
Early-stage investments comprise about 3 per cent of the portfolio. Investments made included Tessa Therapeutics, a Singapore-based biotech firm in the life sciences sector that is developing cell therapy for cancer treatment.
Temasek has also identified six global trends that will influence future investments: Longer lifespans, rising affluence, sustainable living, smarter systems, the sharing economy and a more connected world.
The sharing economy, for example, has spurred the growth of platforms such as Go-Jek and Airbnb.
Ms Sulian Tay, managing director, investment, said in a statement that Temasek sees "the probability of increased downside risks in the near term". But she noted that the firm's balance sheet and portfolio resilience give the flexibility to ride out short-term market volatility while delivering sustainable returns over the long run.
Heightening trade tensions between the US and China were also addressed yesterday at a briefing by Temasek's head of strategy, Mr Michael Buchanan.
"We don't expect to go into a full-blown trade war," he said, but warned that if tensions remain elevated for a significant period of time, there may be an impact on corporate investment.
CIMB Private Bank economist Song Seng Wun noted after the briefing that "risks which had been highlighted earlier such as trade tensions and geopolitical risks are starting to materialise".
The total shareholder return over 20 years is 7 per cent, up from 6 per cent a year ago. Dividend income was $9 billion, while net profit rose from $14 billion a year earlier to $21 billion.