Singapore: Singapore sovereign wealth fund Temasek Holdings Pte. Ltd recovered from most of its portfolio losses this year as markets rallied, saving its blushes after ill-timed exits from Wall Street banks and giving it firepower for new deals.
CEO Ho Ching said any dip in markets could be a buying opportunity for the $122 billion investment firm that is still open to buying financials and investing in emerging markets.
Temasek lost over an estimated $4 billion (Rs19,200 crores) on selling its stakes in Bank of America Inc. and Barclays Plc, but said it had benefited from investing in rights issues for its portfolio firms such as Standard Chartered Plc since these investments more than doubled by the end of July.
“We are in a very good cash position,” Ho said at Temasek’s annual review on Thursday. “We think there are lots of opportunities in (China and India) over the long-term.”
The review showed Temasek’s portfolio slumped S$55 billion or around 30% to S$130 billion in the year to end-March. Its portfolio then rose 32% to S$172 billion by end-July, and its August performance was in line with market indexes, Ho said.
The firm’s value-at-risk was S$28 billion at the end of March, meaning it had a 16% probability it would lose that amount or more this financial year, down from a value-at-risk of S$40 billion a year earlier, the review said.
“We believe the worst of the global meltdown risks are behind us,” said Ho. “While there are some green shoots of growth, some structural risks still remain for the medium term,” she said.
Temasek is Singapore’s second-biggest sovereign wealth fund after the Government of Singapore Investment Corp.
Ho, the wife of Singapore’s prime minister, said Temasek’s board would still search for her successor after CEO-designate and former BHP Billiton chief Chip Goodyear unexpectedly resigned in July over strategic differences.
“The big issue is new leadership. Strategy comes from the leadership. Until they sort out the issue of leadership, nobody is going to be clear what the strategy is,” said the head of a private equity firm in Singapore, who declined to be identified.
The investment company, whose sole shareholder is Singapore’s Ministry of Finance, said net profit for the financial year fell two-thirds to S$6.2 billion, as it was hit by losses on financial stocks and lower contributions from earnings by its portfolio firms such as DBS Group.
“Like investors everywhere they’re just relieved that the market pulled back from the brink,” said David Cohen of Action Economics in Singapore.
The role of sovereign wealth funds around the world, which oversee about $3 trillion in assets, changed from a key source of capital for struggling Western banks early in the crisis, to governments redeploying funds to stabilise home markets.
Temasek said in its annual review it had bought a 19.5% stake in South Korea’s ENK, a supplier of cylinders for compressed natural gas, and 15.4 % of Brazil oilfield services firm San Antonio International.
Nopporn Wong-Anan and Brenda Goh contributed to this story.