SINGAPORE - While Temasek's portfolio remains anchored in Asia, its exposure in Singapore by underlying assets has fallen behind that in China for the first time, on the back of differences in valuations in the two markets.
The Republic now accounts for about 24 per cent of its portfolio, compared to the 29 per cent exposure in China, the state investor shared on Tuesday (Sept 8) in its annual review for the financial year ended March 31.
In comparison, Singapore and China each accounted for 26 per cent of Temasek's portfolio the previous year.
Deputy chief financial officer and head of financial services Png Chin Yee said that the exposure by underlying assets reflects the fact that a lot of Temasek's portfolio companies which are based in Singapore have also expanded beyond Singapore as part of their own plans to capture opportunities abroad.
Temasek's 24 per cent exposure in Singapore is also the lowest for its home market since its formation in 1974. This figure has been between 26 and 29 per cent over the past few years.
In terms of where companies are headquartered, about half of Temasek's portfolio is still based in Singapore, she noted.
Addressing why China has overtaken Singapore in terms of exposure by underlying assets, Ms Png pointed to the relative valuations in the two markets.
"I don't think we should be surprised to see our exposure increasingly being sort of non-Singapore, because if you compare the economy of Singapore versus China or versus the United States, for example, we are a smaller economy.
"It's quite natural as we evolve that we will see much more exposure out of Singapore," she said, but acknowledged that Temasek continues to invest in Singapore and supports the local ecosystem here.
Among its new investments in China are social platform Kuaishou Technology, the Beijing-Shanghai high-speed railway and ophthalmic pharmaceutical platform company Ocumension Therapeutics.
In Singapore, Temasek backs rewards platform ShopBack, as well as alternative meat firm Growthwell Group.
"These create longer-term growth opportunities that complement our exposure in major Singapore holdings and efforts by Heliconia Capital to enable small and medium enterprises to scale beyond Singapore," Temasek said.
Heliconia Capital is a wholly-owned subsidiary of Temasek Holdings.
Meanwhile, the developed markets of North America and Europe now account for 17 per cent and 10 per cent of Temasek's portfolio respectively.
Overall, two-thirds of its underlying exposure is in Asia.
Geographically, the largest share of the firm's new investments during the past fiscal year were in the United States, the same as last year, followed by China and Singapore.
Replying to a question on its exposure to sectors hardest-hit by the Covid-19 pandemic, Temasek International chief executive Dilhan Pillay said that its exposure to the aviation, tourism and travel sectors is about 5 per cent of its portfolio.
The majority of this is in Singapore companies such as Singapore Airlines and Mandai Park Holdings, he noted, and its other investments in these segments are not very significant.
These sectors are undergoing significant change as a result of Covid-19 and this will continue even after the pandemic, he said, but there is always opportunity and value in every sector.
"We're not going to say that these are sectors we will not invest in, we will have to watch what the trends are going to be like, and whether there are business models which will emerge that we could actually go into and support," Mr Pillay said.