Singapore — Singapore state investor Temasek reported its worst performance since 2016 and warned fresh lockdowns imposed by the coronavirus pandemic could further hamper global markets.

Temasek’s net portfolio value was S$306bn ($214bn) vs S$313bn a year earlier, it said on Tuesday. Its portfolio had expanded by 1.5% the period prior. Due to Covid-19, finalised numbers have been slightly delayed in 2020 and are set for release in September.

The decline comes as fund managers globally struggle with the pandemic’s effect on both financial markets and the real-world economy. Some stock markets have bounced back amid hopes of a fast recovery, yet rising case numbers have pushed many countries back into lockdown, hurting consumer spending and limiting already restricted travel.

“The market rebound we’ve seen in recent weeks should be viewed with caution,” Temasek International CEO Dilhan Pillay said in comments released on Tuesday. “The new Covid-normal will be even more complex. A lower-returns environment, geopolitics and strategic rivalries and the pandemic will create even more uncertainties for investors.”

Cash position

Pillay said Temasek had been doing well in the three quarters leading up to the coronavirus outbreak, and that markets had rebounded since March. He also emphasised that the company looks to long-term returns and said the portfolio, which includes both public and private holdings, had performed relatively well.

“We ended the year in a net cash position with a strong balance sheet,” he said. “This positions us well to ride through the tough times to position our companies for future growth.”

Temasek has pledged to support several of its portfolio companies with billions of dollars in cash and other measures as the virus saps revenue and profits.

Singapore Airlines has a Temasek-backed plan to raise about S$8.8bn, while Sembcorp Marine is embarking on a similarly supported capital round. A unit of Temasek is in talks for a potential investment of at least $400m  in Singapore shipping tycoon Chang Yun Chung’s Pacific International Lines, people familiar with the matter said in May.

The company is also funding research efforts to fight Covid-19, as well as aiding the production of vital materials including swabs for test kits, face masks and hand sanitisers.

Market benchmarks

The 2.3% decline in shareholder returns compared with an 18.3% tumble for the MSCI Singapore Index and a 5.8% drop for the MSCI World Index over the same period, Temasek said.

“As was evidenced during the Sars epidemic and the global financial crisis, Temasek typically outperforms market indices during market downturns,” it said in Tuesday’s statement.

Temasek’s total shareholder return since inception in 1974 is 14% compounded annually. TSR takes into account all distributed dividends, less any capital injections. The firm’s net portfolio value has tripled over 16 years, from S$90bn on  March 31 2004.


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