Temasek's 24.5% shareholder return highest since 2010

S'pore investment firm's portfolio valued at record $381b, up from $306b a year before

Singapore investment company Temasek's shareholder return climbed smartly in its latest financial year, potentially raising its contributions to the Republic's coffers.

Its one-year return for shareholders came in at 24.53 per cent, a turnaround from last year's minus 2.28 per cent. This is its highest one-year return since 2010, it said in its annual review yesterday.

Temasek's portfolio was valued at a record $381 billion as at March 31, up from $306 billion a year before, on the back of a rally in global markets.

Temasek's investments benefit Singaporeans through its Net Investment Returns Contribution (NIRC) to the annual Budget.

Under the NIRC framework, the Government can spend up to half of the long-term expected investment returns generated by Temasek, sovereign wealth fund GIC and the Monetary Authority of Singapore, the three entities tasked to invest Singapore's reserves.

Total shareholder return over 10 years was 7 per cent, up from 5 per cent a year ago, while its return over 20 years increased to 8 per cent, it said.

In the last fiscal year, Temasek invested a record $49 billion, including in Singapore's national carrier Singapore Airlines (SIA) and marine and offshore player Sembcorp Marine. It also divested a high of $39 billion.

Analysts said that aside from the contributions to Singapore's fiscal Budget, Temasek's investments have also provided a boost to local enterprises.

CIMB Private Banking economist Song Seng Wun said Temasek's investments in companies and their expansion here also contribute to more job opportunities.

National University of Singapore Business School's Associate Professor Lawrence Loh agreed, noting how local small and medium-sized enterprises (SMEs) have been revitalised by business opportunities arising in the ecosystem.

"For instance, Temasek's involvement in its portfolio companies, including the recent financial injections, has provided means by which the local SMEs can offer supplies, thus retaining their business viability," he said.

Mr Song said Temasek's portfolio rebalancing every year and its investments and divestments are key to ensuring sustainable long-term returns.

China, at 27 per cent, and Singapore, at 24 per cent, remain Temasek's two largest countries of exposure. Temasek remains anchored in Asia, with the region accounting for 64 per cent of its underlying assets.

The Americas, similar to recent years, account for the largest share of new investments, followed by Singapore and China.

Financial services remain the largest sector in Temasek's portfolio at 24 per cent, with telecommunications, media and technology (TMT) accounting for another 21 per cent.

But the composition of companies in these sectors has changed significantly over the last decade, Temasek said. Its financial services portfolio has evolved from mainly banks to include fintech, insurance and payments, while its TMT investments now have a strong focus on the tech space with e-commerce, sharing economy and digital content investments.

Unlisted assets continued to make up the highest share of its portfolio in the latest fiscal year, at 45 per cent.

Temasek's incoming chief executive Dilhan Pillay Sandrasegara, who is CEO of its commercial arm, Temasek International, and will take over from long-serving chief executive Ho Ching in October, said it can help companies tackle current global challenges.

"We will deploy financial capital to stimulate innovation and growth; develop human capital to uplift capabilities and enhance potential; enable natural capital and foster sustainable solutions; and seed social capital to transform lives for a more inclusive and resilient world," he said.

Correction note: An earlier version of this story said that Temasek's investments in its financial year ending March 31, 2021, included agri-food company Olam International. Its investment in the company was made after the financial year ended. We are sorry for the error.

A version of this article appeared in the print edition of The Straits Times on July 14, 2021, with the headline 'Temasek's 24.5% shareholder return highest since 2010'. Subscribe