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Temasek reports 3.7 per cent rise in net value of investment portfolio

The state-linked investment company said on Tuesday (July 8) that its investment portfolio's net value rose to S$223 billion for the year ended March 31.

SINGAPORE: Temasek Holdings on Tuesday (July 8) reported a 3.7 per cent increase in the net value of its investment portfolio - from S$215 billion in 2013 to S$223 billion in the last fiscal year.

In its annual Temasek Review report released on Tuesday, the investment company said Group net profit for the year ended March 31, 2014, rose 2.8 per cent to S$10.9 billion, from S$10.6 billion in the same period last year.

Temasek had received a S$5 billion capital injection from its shareholder during the year.

Total shareholder return (TSR), which is Temasek's key measure of performance, was 1.5 per cent for the past year, down from 8.86 per cent in the previous 12 months. It attributed this mainly to weakness in key Asian markets. 

Temasek's five-year TSR was 11 per cent and its 10-year TSR was 9 per cent, which the firm said reflects the steady growth in its portfolio. Longer term 20-year TSR was 6 per cent, and 14 per cent for 30 years, it added. 

Rohit Sipahimalani, Co-Head of the Investment Group and Head of India at Temasek Holdings, said: "We do invest for the long term, on a year-by-year basis, you will see volatility.

"The reasons why the returns were lower this year is the fact that about half of our portfolio consist of listed companies in Singapore and those listed on the Hong Kong stock exchange H-Shares. If you are listed you cannot be totally immune to the markets. These markets actually showed negative returns last year.

"Over the longer term, we are pretty confident about our investments and our long-term themes. I also mentioned these same markets over the last quarter have returned 4-5 per cent since the April 1."

FINANCIAL SERVICES, LIFE SCIENCES TOP INVESTMENT SECTORS

In the last fiscal year, Temasek invested a total of S$24 billion and divested nearly S$10 billion, for a total net investment of $14 billion.

Temasek Chairman Lim Boon Heng said in the statement that "this year has been one of our most active years for new investments - the most active since the Global Financial Crisis". The new investments are driven by the continued recovery in the global economy as well as lower asset prices in Asia, which offered attractive investment opportunities.

Temasek said the top three sectors for investments during the year were in financial services, life sciences and energy. Among its investments in financial services was the acquisition of a 1.1 per cent stake in United Kingdom-based Lloyds Banking Group.

In life sciences, Temasek invested almost US$1 billion in Gilead Sciences - a firm that develops treatments for cancer, HIV and infectious diseases. It also invested about S$2 billion in Pavilion Energy, which focuses on Liquefied Natural Gas (LNG) in the energy space.

Temasek's key divestments over the year included Singapore's Tiger Airways and part of its stake in India's Bharti Telecom.

It ended the year with an underlying portfolio exposure of 31 per cent in Singapore, 25 per cent in China and 10 per cent in Australia. However, its exposure in North America and Europe grew to over 14 per cent from 12 per cent in the previous year.

Temasek said North America and Europe accounted for 40 per cent of its new investments during the year.

The firm recently set up an office in New York, as well as in London to cover the two regions.

Meanwhile, Temasek said China will continue to present investment opportunities.

Wu Yibing, Head of China at Temasek Holdings, said: "Some of the sectors would include technology, which is a very vibrant sector in China, for example... We have invested in Alibaba

"In terms of the healthcare sector, we see the market really going to the next stage of transformation... In resources, agriculture, you also see a rise in global needs, with the rising middle class."

Looking ahead, Mr Lim said that there will be both challenges and opportunities with the rapidly changing world.

"Even as we mark our 40th anniversary, we embrace the future with all that it brings. At 40, our journey has just begun," he added. 

Temasek said Asia will continue to see long-term growth, especially China, which could see economic growth stabilising at 7 per cent. On economies in the West, Temasek said the US is recovering while conditions in Europe will likely remain weak for some time.

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