Chee Hong Tat on benchmarks for financial performance of Temasek Holdings

Market indices do not serve as “direct benchmarks” to assess the financial performance of Temasek Holdings, said Senior Minister of State for Finance Chee Hong Tat. Replying to MPs’ questions in Parliament on Wednesday (Aug 2), he pointed out that broadly speaking, Temasek has outperformed these market indices over the long term. But it is important to recognise that Temasek is not a portfolio fund manager and the MSCI indices are not direct benchmarks for Temasek’s performance, he said. Mr Chee pointed out that Temasek began its investments with Singapore companies before expanding its portfolio to include firms in other parts of Asia and more recently, North America and Europe. This means its portfolio remains Asia-centric for now, with the region making up two-thirds of its exposure. On the other hand, the composition of market indices varies “significantly” from Temasek’s portfolio. Mr Chee cited the MSCI World Index and MSCI All Country World Index (ACWI) as examples, saying they have larger weightages to the US stock market, which has done well over the past decade when compared with Asian stock markets. “This is why there will be occasions when Temasek’s returns are higher than the MSCI World Index and ACWI, and other occasions when the returns are not as high as these indices,” he said. Mr Chee said Temasek has laid out its focus on building a resilient portfolio that can withstand exogenous shocks, while capturing growth opportunities. “As shareholder, the Government’s role is to ensure that Temasek has a competent board to oversee its management and ensure that its mandate is met,” he said. “The Government will continue to hold Temasek accountable for delivering good long-term returns on the overall investment portfolio.”