Temasek’s portfolio valued at $313b high
But one-year shareholder return plummets to 1.49% from the previous 12.19%
Investment company Temasek defied a tough global economy to chalk up a record-breaking performance in its latest financial year but shareholder return took a hit, it reported yesterday.
Its net portfolio was valued at a new high of $313 billion in the 12 months to March 31, up from $308 billion a year earlier.
But its one-year return for shareholders came in at 1.49 per cent - compared with 12.19 per cent in the previous year.
It was also below its risk-adjusted cost of capital of 7 per cent, which serves as an internal benchmark used to make investment decisions.
This low return prompted a question at its annual review yesterday on whether the company had underperformed.
Temasek International chief executive Dilhan Pillay Sandrasegara said shareholders look to the company for sustainable returns over a long period. He also noted that Temasek has been recalibrating the portfolio over the past decade to make it more resilient.
Ms Png Chin Yee, senior managing director for the portfolio strategy and risk group, added that while Temasek did not meet the hurdle rate last year, it has generally exceeded it over the longer term. She noted that it remains cautious but is still open to opportunities, especially in the private market.
Temasek is increasing its exposure in unlisted companies, said Mr Sandrasegara.
"Investments in this space have generally performed well and provided us with better returns than listed ones since 2002," he said.
Unlisted assets make up 42 per cent of its portfolio - up from 33 per cent in the 2015 fiscal year - and it has plans to expand this share.
The company is also keeping an eye on global trends.
Ms Png said: "While the increasingly challenging global environment may dampen business confidence and investment, we expect policymakers to be primed for dovish policies that could cushion any substantive pressure on growth.
"If growth continues to be weak, the low interest rate environment is likely to persist into the foreseeable future. This could lower returns expectations for the longer term," she added.
Temasek pointed to the volatile nature of share markets over the past 18 months and noted that concerns remain around trade tensions between China and the US.
Chairman Lim Boon Heng said in its annual report: "We remain watchful around the risks of a late-cycle recession in the US. Brexit and political fragmentation continue to weigh on Europe, while China has yet to move fully to restructure its economy for longer-term sustainability."
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