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Temasek Holdings optimistic on China prospects

Temasek Holdings is optimistic about China's prospects, and said it will continue to invest in Chinese banks. The investment firm said these are a good proxy for the long-term growth of the Chinese economy.

SINGAPORE: Temasek Holdings is optimistic about China's prospects, and said it will continue to invest in Chinese banks.

Speaking at a briefing on its performance for the 12 months ended March 2014, the Singapore investment firm said Chinese banks are a good proxy for the long term growth of the world's second largest economy.

As for concerns on shadow banking in China, Temasek said it is closely monitoring this, and that the Chinese government has put in place measures to address the issue.

Wu Yibing, head (China) of Temasek Holdings, said: "Overall we see they have plenty of policy headroom and also plenty of political will to address these questions.

“One thing I would like to add is that our financial institution exposure, particularly banking exposure, is at the leading banks. Their exposure to shadow banking is some of the lowest and their balance sheet and reserves are some of the highest. Our analysis show that their reserves and balance sheet are more than adequate to address some concerns in their exposure to Chinese shadow banking system."

Financial services continued to be the largest sector in Temasek's portfolio, at 30 per cent for the year ended 31 March 2014. This was a shade lower than the 31 per cent in the previous year.

During the period, Temasek increased its stake in Hong Kong-traded H shares of Industrial and Commercial Bank of China to 8.9 per cent, and also took a 1.1 per cent stake in UK's Lloyds Banking Group.

It has also raised its stake in insurance company AIA to over 3.5 per cent.

Banks and financial institutions account for about 30 per cent of Temasek's portfolio.

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