Temasek portfolio value dips 2.2% to $306 billion amid Covid-19: Preliminary data

Temasek's one-year total shareholder return dropped to minus 2.3 per cent, down from 1.49 per cent a year ago. PHOTO: ST FILE

SINGAPORE - Temasek Holdings announced on Tuesday (July 21) a preliminary net portfolio value (NPV) of $306 billion in the year to March 31, a 2.2 per cent decline from the record $313 billion achieved a year ago.

Its one-year total shareholder return (TSR) dropped to minus 2.3 per cent, from 1.49 per cent previously, amid fallout from the Covid-19 pandemic, according to preliminary figures that are based on current unaudited information.

They come ahead of the September release of Temasek's final, audited consolidated group financials and portfolio performance. Its chief executive Ho Ching had earlier this month announced the delay from July in a Facebook post, noting that the coronavirus pandemic had affected financial reporting for many of Temasek's portfolio companies, especially those with operations all over the world.

Temasek's final portfolio performance results are not expected to be materially different from the preliminary figures, the state investment firm said on Tuesday in a media release.

The drop in Temasek's NPV was the first in four years. It "had been growing steadily and trending well" before the onset of the virus, and tripled over the 16 years from $90 billion in 2004.

"On the whole, we are pleased with our performance, despite the sharp correction due to Coved-19," said Temasek International CEO Dilhan Pillay in the release.

"We were not spared the impact of Covid," he said in a video message, adding that the end of Temasek's financial year coincided with some of the worst of the market dislocation during the pandemic. Since then, however, the value of its listed assets has risen.

Its 16-year TSR was a compounded 7.5 per cent from 2004. TSR takes into account all dividends distributed, less any capital injections.

Temasek also said it has outperformed market indices during the virus-induced downturn, as it did during the Sars epidemic (2003) and the global financial crisis (2008).

It reiterated that as an investor with a long-term horizon, it does not manage its portfolio to short-term mark-to-market changes by benchmarking against market indices or comparing against the returns of other companies. Mark-to-market refers to valuing assets by their most recent market prices.

But as a reference to how it has performed over the last financial year relative to market indices in Asia, Temasek said its portfolio "stayed resilient" with a 2.3 per cent decline, compared with the MSCI Singapore Index and the MSCI AC Asia ex-Japan Index, which fell 18.3 per cent and 9.0 per cent respectively.

Globally, the MSCI World Index lost 5.8 per cent. Most of these declines were the result of the sharp market correction in the last quarter up to March 31, due to the virus outbreak.

Mr Pillay cautioned that: "Rising geopolitical and trade tensions, as a result of increasing nationalism and protectionism, will create more uncertainties for long-term investors and asset owners.

"These uncertainties are now exacerbated by the immediate, as well as longer-term, impact of Covid-19."

But Temasek has a good mix of listed and unlisted investments, a good balance between portfolio stalwarts and new investments into emerging and longer-term trends, he said, that will "help to add to our resilience".

Mr Pillay added that companies like PSA continue to provide steady returns, even as they prepare actively for future challenges like the hydrogen economy and other longer-term changes.

Temasek said it ended the financial year in a net cash position, with a strong balance sheet. This gives it the capacity to work with its portfolio companies to position them for the future, it said. It also stands ready to invest in opportunities arising from volatile market conditions during and post Covid-19 recovery.

Mr Pillay said investors may sharpen their focus in some areas, like digitalisation and healthcare.

Amid the pandemic, Temasek led a multi-billion-dollar rescue package for Singapore Airlines and supported a rights issue by loss-making rig builder Sembcorp Marine.

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