Temasek's Assets Look Set to Fall for the First Time Since 2016

(Bloomberg) -- Temasek Holdings Pte may report its first decline in net portfolio value since 2016 as global trade uncertainties and volatile equity markets take their toll.

Singapore’s state investor, which had S$308 billion ($226 billion) in assets as of March 2018, will release its 2019 annual report Tuesday. CIMB Private Banking economist Song Seng Wun, who has been covering Temasek for over a decade, predicts the figure may dip to S$300 billion.

Investors globally are facing a tough environment as the trade war between China and the U.S. clouds the market outlook and other issues like Brexit dent returns. Singapore’s sovereign wealth fund GIC Pte last week said overhyped valuations in developed markets were also a concern.

While a decline in that vicinity would be within the range envisaged by Temasek in its 2018 annual report, it would only represent the fund’s third fall in a decade (net portfolio value dipped in 2016 and again in 2009 during the global financial crisis).

Temasek struck a 3 billion euro ($3.4 billion) deal to buy a substantial stake in Bayer AG in April 2018, only to see the German healthcare and agricultural giant lose more than one-third of its value amid a flurry of lawsuits relating to claims a weedkiller brand it acquired when it took over Monsanto Co. causes cancer.

The Singapore investor also holds a large interest in U.S. telecoms provider CenturyLink Inc., whose shares slumped 27% in the 12 months through March 31 (Temasek’s financial year-end) after a string of setbacks including a customer lawsuit alleging fraud.

Tougher Year

It’s also a shareholder in Industrial & Commercial Bank of China Ltd., down 14.6% over the period, and DBS Group Holdings Ltd., down 8.3%.

“For everybody, it’s been a far tougher year,” said CIMB’s Song. “When you’re so large you tend to have a presence in large, representative companies across many industries. When it works, it works it works very well. But as we’ve seen with the Monsanto case, when when it doesn’t, it can flip against you.”

Song said he expects Temasek to have an enlarged focus on backing firms that place importance on sustainability amid the rise of environmentally conscious consumers. Temasek’s direct equity investments peaked at $6.13 billion in the second quarter of last year, based on estimates by the Sovereign Wealth Center in London, the Business Times reported last month.

Rohit Sipahimalani, Temasek’s co-head of investment, said in May the fund was seeking to make investments related to six themes: longer life spans, rising affluence in emerging markets, sustainable living, smarter systems, the sharing economy and the connected world.

Sipahimalani also said Temasek was paying more attention to tech companies and getting in before their initial public offerings because “if you’re not in there early, it’s difficult to catch the wave.”

To contact the reporter on this story: David Ramli in Singapore at dramli1@bloomberg.net

To contact the editors responsible for this story: Katrina Nicholas at knicholas2@bloomberg.net, Sam Mamudi

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