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Temasek and Government-linked companies outperform market, study finds

Temasek Holdings’ 20-year total shareholder return was 2.5 times that of the MSCI Singapore index in 2012, according to the study by NUS and the Chartered Institute of Management Accountants.

SINGAPORE: Better-than-average corporate governance and a clear business mandate have helped Temasek Holdings and Government-linked companies (GLCs) in Singapore perform better than the market, according to a study published on Friday (July 11).

Undertaken by the National University of Singapore (NUS) Business School’s Centre for Governance, Institutions and Organisations (CGIO) and the Chartered Institute of Management Accountants, the study is based on Singapore Exchange-listed GLCs and Government-linked real estate investment trusts (GLREITs), as well as GLCs’ performance on CGIO’s Governance and Transparency Index between 2009 and 2013.


The study found that Temasek Holdings’ 20-year total shareholder return was 2.5 times that of the MSCI Singapore index as of 2012, and that the market value of its portfolio surged by 300 per cent between 1994 and 2013.

The study also found that, between 2008 and 2013, GLCs accounted for an average of 37 per cent of the stock market’s value of S$500 billion, while GLREITs made up 54 per cent of the REIT market value of S$35 million.


The research linked the better-than-average performance of GLCs to several drivers of good corporate governance:

  • The ability to operate with a clear business mandate and at arm’s length from politics
  • Being publicly-listed on the stock exchange
  • Internationalisation of GLCs’ businesses
  • Ieadership continuity
  • Adoption of corporate governance best practices

Between 2009 and 2013, GLCs outperformed non-GLCs in various corporate governance measures on the GTI, such as director independence, the nomination process for directors, disclosure of directors’ remuneration, communication with shareholders, as well as auditing and accountability.

The study also found that the majority of GLCs (79 per cent) had at least one independent director with industry experience compared with less than half of non-GLCs.

GLCs were also found to have a higher proportion of independent directors on their boards, compared with non-GLCs. Notably, 89 per cent of GLCs had an independent chairman or a non-executive director who was not from the chief executive officer’s family, compared to 32 per cent of non-GLCs.

“In many countries, state ownership is known to detract from company performance due to issues such as political interference and rent seeking, or unfair advantages from political protection,” said Professor Steen Thomson, co-author of the study and member of CGIO’s Academic Advisory Council.

“In contrast, Temasek Holdings has previously stated that it acts like an active investor with long-term returns maximisation as an important motive in its investment decisions, and that the Government does not interfere in its business decisions. We believe that such a structure is particularly important,” added Prof Thomson.

For the study, GLCs and GLREITs were defined as organisations in which Temasek Holdings had a stake of at least 20 per cent between April 2012 and March 2013. A total of 23 such GLCs and GLREITs were examined.

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