SG state investor Temasek’s biggest shareholdings fall $23.5b in three months

FILE PHOTO - A Temasek logo is seen at the annual Temasek Review in Singapore July 7, 2016. REUTERS/Edgar Su

Temasek Holdings Pte’s biggest equity shareholdings and those of its subsidiaries have plunged almost $24 billion since January as the spreading coronavirus sends markets into spasms.

Singapore’s state investor owns or controls multibillion-dollar stakes in companies that straddle the world, from Chinese e-commerce giant Alibaba Group Holding Ltd. to Singapore Airlines. A Bloomberg analysis of the top 12 holdings of Temasek and companies it controls as of March 20 shows a decline in market value of around one-third.

The plunge comes at a critical time for Singapore, whose financial strength is partly linked to Temasek, sovereign wealth fund GIC Pte, and the Monetary Authority of Singapore. The government uses a formula that includes the expected long-term returns of all three entities to calculate the net investment return contribution, which helps fund the budget each year. In fiscal 2020, that contribution is expected to be S$18.6 billion ($12.8 billion).

Singapore’s President Halimah Yacob said earlier this month that the city-state must consider tapping past reserves to help its people and businesses that are “bleeding” from the impact of the virus.

Asked about the likely decline in value of Temasek’s portfolio due to the Covid-19 outbreak, Temasek Holdings Chairman Lim Boon Heng, speaking on the sidelines of a community event last Tuesday, said that the most important priority was to weather the crisis.

“It’s pretty obvious with the way stock markets are behaving recently that we should expect the returns to be down,” he said. “But now is not the time to think about whether you’ve made a loss or not. Now is the time to see how we can all get rid of this virus.”

A spokesman for Temasek declined to comment further.

Temasek’s top 12 equity holdings by market value were worth a combined $73.8 billion on January 2 but had fallen to $50.3 billion as of March 20. This includes shares in which the firm is deemed to have beneficial interest, such as Thai mobile phone operator Advanced Info Service Pcl, which is part-owned by Temasek subsidiary Singapore Telecommunications Ltd.

The nation’s benchmark Straits Times Index slumped 7.4% on Monday.

Singtel is the biggest source of the decline, with Temasek’s majority stake in the business slumping $7.4 billion. Next is Southeast Asia’s biggest bank, DBS Group Holdings Ltd., down $5.3 billion.

Temasek’s interest in Singapore Airlines, which on Monday slashed capacity by 96% amid the escalating outbreak, has declined $1.7 billion.

Company Decline in Value of Temasek’s Holding
Singtel $7.4 billion
DBS $5.3 billion
CapitaLand $2.3 billion
Singapore Airlines $1.7 billion
Singapore Technologies Engineering $1.4 billion

With equity markets swooning and oil prices taking a hit, Temasek is far from the only one suffering. While state funds are arguably better positioned than most to ride out bouts of volatility because they take a long-term view, when their reserves are required, there can be significant consequences.

Not All Doom

Norway, for example, looks set to withdraw a record $13 billion from its giant sovereign wealth fund to help pay for the historic stimulus measures being unveiled to combat the virus impact. Globally, state funds control some of the biggest pools of investments with the 10 largest overseeing $5.8 trillion, data from the Sovereign Wealth Fund Institute show.

The slide in share values this quarter is also a disappointing end to what was shaping up to be a reasonable year for Temasek, even despite the U.S.-China trade war. In January, Temasek International Chief Executive Officer Dilhan Pillay said the firm’s portfolio value was up by about 3%. It’s Pillay’s first year at the helm.

Temasek had a net portfolio value of S$313 billion as of March 31, 2019, up 1.6% from the year prior.

That’s not to say the decline in public equities spells outright doom for Temasek. About 42% of its assets as of March 31, 2019 were not publicly listed and are therefore less affected by volatile stock markets. Temasek is due to release its annual report for the year ended March 31, 2020 in a few months.

Temasek last month announced a company-wide wage freeze and voluntary pay cuts for senior management in part to help fund community programs aimed at alleviating the impact of Covid-19.

Bloomberg

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.