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The Singaporean investment company made a loss – but an impressive one in the circumstances
Temasek, one of Singapore’s sovereign wealth vehicles, today announced unaudited figures for its last financial year, showing a 2.3% decline in total shareholder return.
In the circumstances, that’s really not bad.
The Temasek financial year ends on March 31 – which, you’ll recall, was right in the teeth of the market declines as Covid escalated from being an Asian to a truly global concern. The World Health Organization declared Covid-19 a pandemic on March 11; the market bottom, for now at least, came 12 days later, and the Temasek year-end eight days after that. The MSCI World Index was down 5.8% in the year to March 31, the MSCI AC Asia ex-Japan 9% and the MSCI Singapore Index 18.3%.
Temasek’s success in ducking most of this loss, and maintaining a compound total shareholder return of 7.5% annualized over the last 16 years (or 14% a year since foundation in 1974), shows the nimbleness of a unique sovereign institution.
We’ve remarked before that Temasek does not look like most other sovereign wealth funds. The vehicle in Singapore with the classic sovereign wealth appearance – balanced portfolio across multiple asset classes, mandate to invest and diversify the national reserves, target to beat inflation – is GIC. Temasek invests mainly in equities, with a mandate to earn a spread over its cost of capital in the long term.
There are years when that results in some relatively wild gyrations, like when China has a bad year, but it also brings a certain agility.
Today’s announcement is not the full report on portfolio performance – that will come in September, two months later than usual because several portfolio companies have delayed reporting their own performance – but we do have some clues as to how Temasek has measured its portfolio, worth S$306 billion ($220 billion) on March 31.
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