Economy

Temasek portfolio value dips 2.2% to $306 billion amid Covid-19: Preliminary data

SINGAPORE – Temasek Holdings announced on Tuesday (July 21) a preliminary net portfolio value (NPV) of $306 billion in the year to March 31, a 2.2 per cent decline from the record $313 billion achieved a year ago.

Its one-year total shareholder return (TSR) dropped to minus 2.3 per cent, from 1.49 per cent previously, amid fallout from the Covid-19 pandemic, according to preliminary figures that are based on current unaudited information.

They come ahead of the September release of Temasek’s final, audited consolidated group financials and portfolio performance. Its chief executive Ho Ching had earlier this month announced the delay from July in a Facebook post, noting that the coronavirus pandemic had affected financial reporting for many of Temasek’s portfolio companies, especially those with operations all over the world.

The final portfolio performance results are not expected to be materially different from the preliminary figures, Temasek said on Tuesday in a media release.

Temasek said its NPV “had been growing steadily and trending well” before the onset of the Covid-19 pandemic. It has tripled over the 16 years from $90 billion in 2004

Its 16-year TSR was a compounded 7.5 per cent from 2004, . TSR takes into account all dividends distributed, less any capital injections.

Temasek also said it has outperformed market indices during this current virus-induced downturn, as it did during the Sars epidemic (2003) and the global financial crisis (2008).

It reiterated that as an investor with a long-term horizon, it does not manage its portfolio to short-term mark-to-market changes by benchmarking against market indices or comparing against the returns of other companies. Mark-to-market refers to valuing assets by their most recent market prices.

But as a reference to how it has performed over the last financial year relative to market indices in Asia, Temasek said its portfolio “stayed resilient” with a 2.3 per cent decline, compared with the MSCI Singapore Index and the MSCI AC Asia ex-Japan Index, which fell 18.3 per cent and 9.0 per cent respectively. Globally, the MSCI World Index lost 5.8 per cent. Most of these declines were the result of the sharp market correction in the last quarter up to March 31, due to the virus outbreak.

Temasek added that it ended the financial year in a net cash position, with a strong balance sheet. This gives it the capacity to work with its portfolio companies to position them for the future, it said. It also stands ready to invest in opportunities arising from volatile market conditions during and post Covid-19 recovery.

Mr Dilhan Pillay, CEO of Temasek International, said: “On the whole, we are pleased with our performance, despite the sharp correction due to Covid-19. We have a good mix of listed and unlisted investments, a good balance between our portfolio stalwarts and our new investments into emerging and longer term trends. These help to add to our resilience.”

He said the Covid-19 impact has exacerbated the uncertainties for long-term investors and asset owners arising from geopolitical and trade tensions. This may see investors sharpen their focus in some areas, like digitalisation and healthcare.

Mr Pillay added that companies like PSA continue to provide steady returns, even as they prepare actively for future challenges like the hydrogen economy and other longer-term changes. 

Amid the pandemic, Temasek led a multibillion-dollar rescue package for Singapore Airlines and supported a rights issue by loss-making rig builder Sembcorp Marine.

Read the latest on the Covid-19 situation in Singapore and beyond on our dedicated site here.

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