Singapore: Singapore wealth fund Temasek Holdings is expected to show the extent of its portfolio shift towards the resources sector and may provide clues about leadership changes when unveiling its annual report on Thursday.
The world’s eighth-largest and the city-state’s second-biggest sovereign wealth fund, behind the Government of Singapore Investment Corp, may respond to speculation that Singapore wealth funds are in talks with BP Plc to take a strategic stake in the oil major as it struggles with a devastating oil leak in the Gulf of Mexico.
Temasek declined to comment on the speculation on Tuesday.
With S$172 billion ($123.6 billion) in assets as of end-July 2009, Temasek could also reveal it fared better in the year ended 31 March after assets fell 30% in the prior year as the global financial crisis struck.
It has been expanding aggressively into energy, commodities and agriculture. Financials and telecoms, however, still account for the biggest share of its holdings.
“Temasek’s move to resources is consistent with its goal of catering to Asia’s emerging middle class,” said Melvyn Teo, director of the BNP Paribas Hedge Fund Centre at Singapore Management University.
“Demand for resources will go up because of emerging economies like China but there is only so much supply, so prices will go up over time.”
The fund’s recent investments include convertible preferred stock in US natural gas firm Chesapeake Energy and GMR Energy, and shares in Canadian platinum producer Platmin.
Singbridge, a wholly owned unit of Temasek, may invest in a $16 billion agricultural project in northeastern China that will produce corn and soybean for Chinese consumers and export pork, beef and dairy products to countries such as Japan, Korea and Singapore.
According to Temasek’s report for the year ended March 2009, the fund held about 5 percent of its assets in energy and resources, unchanged from March 2008. That proportion could have risen to around 8% by 10 March involving additional investment of about $4 billion, analysts said.
In 2009, investments in financial services comprised 33% of the fund, while telecommunications and media made up 26%.
The tightly controlled fund, whose sole shareholder is Singapore’s Ministry of Finance, came in for criticism last year over its loss-making investments into Western banks such as Bank of America/Merrill Lynch and Barclays and the departure of foreigners from its management team.
But things would have looked better for Temasek during the latest year as stock markets improved. MSCI’s world equity index jumped 56% in the 12 months to March 2010, while the MSCI Asia ex-Japan index gained 74%.
Temasek may, at the briefing on its 2009-10 annual report, provide cues about when current CEO Ho Ching, the wife of Singapore Prime Minister Lee Hsien Loong, is expected to step down and who her successor might be.
Ho was scheduled to leave Temasek in October last year but her designated successor, former BHP Billiton CEO Charles Goodyear, left the Singapore state investor in July citing differences in strategy.
In March, senior managing director Michael Dee, an American, also stepped down, leaving its management team mostly Singaporean.
Temasek said in May that former Singapore Exchange CEO Hsieh Fu Hua will join Temasek as executive director and president in August to assist Ho in areas such as talent development and succession planning.
Dilhan Pillay Sandrasegara, the former managing partner of WongPartnership, Singapore’s biggest law firm, will join as head of portfolio management, Temasek added.
Both are Singaporeans.
The state investor may also shed more light on how how it plans to build Seatown, a multi-billion-dollar investment firm it set up earlier this year with staff seconded from Temasek.
Sources said Seatown aims to raise funds from external investors to earn fees as well as show foreign governments that Temasek was a financial investor with no political agenda. Seatown, the English word for Temasek, will in time allow ordinary Singaporeans to co-invest with the firm.
“I really hope to see more information about Seatown, as it adds an extra dimension to how Temasek is set up,” said SMU’s Teo.