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Euromoney, July 21 2020

The Singaporean investment company made a loss – but an impressive one in the circumstances

Temasek, one of Singapore’s sovereign wealth vehicles, today announced unaudited figures for its last financial year, showing a 2.3% decline in total shareholder return.

In the circumstances, that’s really not bad.

The Temasek financial year ends on March 31 – which, you’ll recall, was right in the teeth of the market declines as Covid escalated from being an Asian to a truly global concern. The World Health Organization declared Covid-19 a pandemic on March 11; the market bottom, for now at least, came 12 days later, and the Temasek year-end eight days after that. The MSCI World Index was down 5.8% in the year to March 31, the MSCI AC Asia ex-Japan 9% and the MSCI Singapore Index 18.3%.

Temasek’s success in ducking most of this loss, and maintaining a compound total shareholder return of 7.5% annualized over the last 16 years (or 14% a year since foundation in 1974), shows the nimbleness of a unique sovereign institution.

We’ve remarked before that Temasek does not look like most other sovereign wealth funds. The vehicle in Singapore with the classic sovereign wealth appearance – balanced portfolio across multiple asset classes, mandate to invest and diversify the national reserves, target to beat inflation – is GIC. Temasek invests mainly in equities, with a mandate to earn a spread over its cost of capital in the long term.

There are years when that results in some relatively wild gyrations, like when China has a bad year, but it also brings a certain agility.

Today’s announcement is not the full report on portfolio performance – that will come in September, two months later than usual because several portfolio companies have delayed reporting their own performance – but we do have some clues as to how Temasek has measured its portfolio, worth S$306 billion ($220 billion) on March 31.

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Chris Wright
Chris Wright
Chris is a journalist specialising in business and financial journalism across Asia, Australia and the Middle East. He is Asia editor for Euromoney magazine and has written for publications including the Financial Times, Institutional Investor, Forbes, Asiamoney, the Australian Financial Review, Discovery Channel Magazine, Qantas: The Australian Way and BRW. He is the author of No More Worlds to Conquer, published by HarperCollins.

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