Stronger performance expected at Temasek Holdings amid stock market upturn – The Straits Times

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SINGAPORE – Temasek Holdings is expected to turn in a stronger set of numbers in its upcoming performance review, with stock markets around the world taking a turn for the better.

Analysts say the Singapore investment company’s pivot towards the thriving tech sector will also contribute to a better showing.

Temasek is expected to unveil its numbers next week for the financial year ended March 31.

The firm reported a decline in its net portfolio value in its review last year – the first fall since 2009 during the global financial crisis.

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Its net portfolio value fell to $242 billion as at March 31, 2016, down from an all-time high of $266 billion a year earlier.

In addition, its one-year total shareholder return came in at a negative 9.02 per cent, reflecting the share price declines of its listed investments.

“The year before was tough for everyone,” said CIMB Private Bank economist Song Seng Wun, noting that multiple stock routs in China had triggered a tidal wave of losses across global bourses during that period.

Temasek’s China holdings, which include some of the country’s biggest banks, made up about a quarter of its portfolio as of last year.

Since then, fears over the outlook for China have subsided and equity markets in both developed and emerging markets have rallied.

This rebound would have lifted the listed assets in Temasek’s portfolio, which made up about three-fifths of its holdings as of last year.

“The anticipation of pro-growth policies following the election of United States President Donald Trump had in part triggered the rally, while economic indicators have also generally surprised on the upside at the start of the year,” said IG market strategist Pan Jingyi.

“Meanwhile Asia embarked on a growth cycle, with exceptionally strong demand seen for electronics. The improved demand had also led to high commodity prices, providing a turn for many energy and resources companies.”

Mr Song expects Temasek to report a 12 per cent to 15 per cent rise in its net portfolio value at its upcoming performance review.

“Equities have generally performed well, with double digit returns,” he noted.

The MSCI World Index gained 13 per cent in the 12 months ended March 31, while the Straits Times Index rose 12.7 per cent in the same period.

Temasek’s Singapore holdings made up 29 per cent of its portfolio as of last year.

DBS Bank – in which Temasek is the largest shareholder – saw its share price surge 27.5 per cent in the year ended March 31.

Other Singapore companies in Temasek’s portfolio include conglomerates Keppel and Sembcorp, whose share prices recovered over the period as a prolonged downturn in oil and gas bottomed out.

Besides its listed assets, Ms Pan noted that the investment company’s shift towards opportunities in the tech sector “may also yield positive performance given the tech rally thus far”.

But this growing focus on tech investments and unlisted assets also makes it tougher to get a handle on Temasek’s overall performance, Mr Song noted.

“They have more and more investments in private equity, so making a guess is far more challenging. Private equity is higher risk but normally also yields higher returns,” he said.

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