Temasek's portfolio value falls by 5%. Here's what we learnt from the latest Temasek Review

What happened?

In the latest Temasek Review 2023, Temasek noted that “2022 has been the most challenging year for markets over the past decade”.

Temasek generated a one-year total shareholder return of -5.1% for the year ended 31 March 2023, its worst performance since 2016. 

Temasek’s investment philosophy is to generate risk-adjusted returns over the long term. 

However, this annual event provides us with a glimpse of its investment decisions made over the past year, and what investment opportunities it sees in the market today. 

Let’s take a look at our key takeaways from Temasek Review 2023. 

Key takeaways from Temasek Review 2023

#1 – 1-year negative total shareholder return of 5%

Temasek’s net portfolio value fell to S$382 billion as at end-March 2023, a decline of S$21 billion compared to its portfolio value of S$403 billion as at end-March 2022. 

This marks the first time that Temasek’s net portfolio value has declined since 2020, when the Covid-19 pandemic led to a fall in its portfolio value.

The 1-year total shareholder return (TSR) was negative 5.1%, effectively reversing the gain of 5.8% reported in the previous year.

Looking at the longer term, the 20-year TSR stood at 9%, while the 10-year TSR was at 6%.

#2 – Singapore investments remain resilient

Singapore investments represent 28% of its entire portfolio as at March-2023, continuing an uptrend that we saw since the previous year.

One of the reasons for the greater contribution from Singapore investments is the Singapore equity market has remained resilient in the past year. 

For example, DBS’ share price was still close to S$33.50 in March, even though it has come down slightly from its 52-week high of S$36.40.

Find out more about what is driving DBS’ share price. 

On the other hand, Sembcorp Industries’ share price has climbed over the past year, reaching S$4.30 on 30^th March 2023 before continuing to rise to a 52-week high of S$5.82. 

Find out more about what is driving Sembcorp Industries’ share price. 

The other reason driving the increase is also because of Temasek’s participation in SATS’ right issue to fund its acquisition of Worldwide Flight Services. 

#3 – Looking to invest more into Southeast Asia

China now represents 22% of Temasek’s portfolio, making it the second largest exposure after Singapore. 

Rohit Sipahimalani, Temasek’s chief investment officer, said that there is a need to apply a geopolitical lens to all its investments. In particular, he mentioned that Temasek “won’t invest in areas that are in the cross-hairs of US-China tensions.”

Instead, Temasek will “prefer to invest in companies that have access to large domestic markets.” As such, it is looking to invest more in Southeast Asia due to the region’s favourable demographics and digital economy. 

#4 – Value of private investments reflect some impairments and write-downs

Temasek’s unlisted assets now represent 53% of its portfolio, exceeding the value of its listed assets for the second year.

Unlisted assets are now valued at about S$202 billion, declining slightly from S$210 billion in the previous year, but still close to four times its value of S$58 billion in 2013. 

According to Temasek’s representatives at the press conference, the performance would have factored in some impairments and write-downs over the past year, such as the write-down of its US$275 million investment into FTX. 

What would Beansprout do?

Temasek’s investments and performance are closely watched as it is one of top 10 investors globally by assets under management. 

More recently, the share price of Singapore Airlines (SIA) fell sharply after Temasek sold a portion of its stake while remaining the majority shareholder of SIA.

Looking ahead, Temasek is maintaining a cautious investment stance as it expects global growth to slow with recession risks looming in key developed markets. 

In fact, Temasek’s Chief Executive Officer Dilhan Pillay noted that “the investment climate has become much more complex than we have encountered since the global financial crisis.”

Earlier, we shared our thoughts on how slowing global growth and US Federal Reserve interest rate decision could mean for your investments.