Unlock the Editor’s Digest for Free
Temasek Shifts Focus to US Investments, Cautious on China
Singapore’s state-owned investment group, Temasek, has announced that it will prioritize investments in the United States and be cautious about China, following a warning that its large exposure to China’s economy had impacted its performance.
Temasek’s Portfolio Performance
In its annual review, Temasek reported that the value of its portfolio rose by 2% to S$389 billion ($288 billion) in the year to March. While this figure lags behind the 28% gain of the S&P 500 stock index over the same period, it marks an improvement from last year’s 5% decline, which was the worst performance since 2016.
China’s Impact on Temasek’s Portfolio
Growth from investments in the US and India was offset by the underperformance of China’s capital markets, Temasek said. China is the company’s third-largest market, with 19% of its portfolio tied to the country. The MSCI China index was down 19% during the same period.
Temasek’s Approach to China
Temasek’s deputy chief executive, Chia Song Hwee, stated that the company is looking for consumer confidence to return and spending to increase in China. He also mentioned that Sino-US tensions have altered the company’s approach, with a focus on investing in companies that do not rely on importation from China and those that do not rely on exports to the US.
Artificial Intelligence Investment
Chia also expressed caution about artificial intelligence investment, warning of "hype" in the industry. Temasek is not planning to invest directly in OpenAI, but may have exposure to the company through investments in venture capital funds. The company is taking a cautious approach to early-stage AI start-ups, investing through VC funds and then making direct investments based on what it learns.
Temasek’s Focus on Other Markets
Temasek will continue to focus on the US, which will remain the largest destination of its capital outside of Singapore. The company will also increase its focus on India, Japan, and south-east Asia, markets that have benefited from global investors seeking to reduce their exposure to China as growth slows and geopolitical tensions rise.
Private Equity and Real Estate
Temasek has shifted its focus from public equities to private markets, increasing its allocation to unlisted assets to 52% of its portfolio as of March. The company has benefited from a private equity boom, but executives have warned that funds face the prospect of lower returns as rising interest rates have hit its debt-fuelled model.
Conclusion
Temasek’s shift in focus to US investments and caution on China reflects the company’s efforts to adapt to changing market conditions. As the global economy continues to evolve, it is essential for investors to remain flexible and responsive to new opportunities and challenges.
FAQs
Q: What is Temasek’s current allocation to unlisted assets?
A: As of March, Temasek’s allocation to unlisted assets is 52% of its portfolio.
Q: How has Temasek’s portfolio performed in the past year?
A: The value of Temasek’s portfolio rose by 2% to S$389 billion ($288 billion) in the year to March.
Q: What is Temasek’s approach to China?
A: Temasek is looking for consumer confidence to return and spending to increase in China. The company is also being cautious about China, investing in companies that do not rely on importation from China and those that do not rely on exports to the US.
Q: Is Temasek investing in OpenAI?
A: Temasek is not planning to invest directly in OpenAI, but may have exposure to the company through investments in venture capital funds.
Q: What is Temasek’s focus on other markets?
A: Temasek will continue to focus on the US, which will remain the largest destination of its capital outside of Singapore. The company will also increase its focus on India, Japan, and south-east Asia.
Author: www.ft.com
Orginal Source link