Temasek Reports Worst Year Since 2016 Amid Volatile Markets

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Singapore’s state-owned investment giant has suffered its worst year since 2016, and warned a second wave of coronavirus could further hamper global markets.

Temasek Holdings Pte reported a preliminary total shareholder return of minus 2.3% in the year ended March 31, trimming its net portfolio value to S$306 billion ($214 billion) versus S$313 billion a year earlier.

The decline comes as fund managers globally struggle with the pandemic’s effect on both financial markets and the real-world economy. Some stock markets have bounced back amid hopes of a fast recovery, yet rising case numbers have pushed many countries back into lockdown, hurting consumer spending and limiting already restricted travel.

Temasek Reports Worst Year Since 2016 Amid Volatile Markets

“The market rebound we’ve seen in recent weeks should be viewed with caution,” Temasek International Chief Executive Officer Dilhan Pillay said in pre-recorded comments released Tuesday. “The new Covid-normal will be even more complex. A lower-returns environment, geopolitics and strategic rivalries and the pandemic will create even more uncertainties for investors.”

Due to Covid-19, finalized numbers have been slightly delayed this year and are set for release in September.

Cash Position

Pillay said Temasek had been doing well in the three quarters leading up to the coronavirus outbreak, and that markets had rebounded since March. He also emphasized that the company looks to long-term returns and said the portfolio, which includes both public and private holdings, had performed relatively well.

“We ended the year in a net cash position with a strong balance sheet,” he said. “This positions us well to ride through the tough times to position our companies for future growth.”

Temasek has pledged to support several of its portfolio companies with billions of dollars in cash and other measures as the virus saps revenue and profits.

Singapore Airlines Ltd. has a Temasek-backed plan to raise around S$8.8 billion, while Sembcorp Marine Ltd. is embarking on a similarly supported capital round. A unit of Temasek is in talks for a potential investment of at least $400 million in Singapore shipping tycoon Chang Yun Chung’s Pacific International Lines Pte, people familiar with the matter said in May.

The company is also funding research efforts to fight Covid-19, as well as aiding the production of vital materials including swabs for test kits, face masks and hand sanitizers.

Market Benchmarks

The 2.3% decline compared to an 18.3% tumble for the MSCI Singapore Index and a 5.8% drop for the MSCI World Index over the same period, Temasek said.

“As was evidenced during the SARS epidemic and the global financial crisis, Temasek typically outperforms market indices during market downturns,” it said in Tuesday’s statement.

Temasek’s total shareholder return since inception in 1974 is 14% compounded annually. TSR takes into account all distributed dividends, less any capital injections. The firm’s net portfolio value has tripled over 16 years, from S$90 billion as of March 31, 2004.

©2020 Bloomberg L.P.

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