SINGAPORE—Singapore's state investment firm Temasek Holdings
Pte. Ltd. on Tuesday played down concerns about slowing economic
growth and volatile equity markets in China, its second-largest
investment destination, as it reported a sharp jump in net profit
for its most recent fiscal year.
Temasek said net profit rose to 14.5 billion Singapore dollars
(US$11 billion) in the year ended March, up 32% from the year
before, largely thanks to strong performance from its holdings in a
range of domestic companies and Chinese banks. Its portfolio value
grew 19% to a record S$266 billion, in the most active year for the
company since the global financial crisis, when it bought stakes in
high-profile Western banks such as Barclays PLC and Merrill
Lynch.
"We remain confident in the long-term prospects of the Chinese
economy," Wu Yibing, head of China operations for Temasek, said at
the company's annual review. He said the Chinese government should
prove capable of addressing issues such as higher credit risk and
slowing economic growth.
In turn, Mr. Wu said Temasek believes the recent volatility in
Chinese stocks would prove short-term and may provide opportunity
for further investment. China's Shanghai stock market surged by 84%
during Temasek's reporting period. However, worries about a slowing
economy in China have contributed to a 27% fall in the country's
main stock index since mid-June.
China is Temasek's largest investment destination outside of
Singapore, accounting for 27% of its total allocation, up from
around quarter of its portfolio a year earlier, while about 28% of
Temasek's portfolio is invested at home. The company began
investing in China in 2005, beginning with its banks, and is
diversifying its investment into other sectors such as technology,
life sciences and consumer-related sectors. In December Temasek led
a group of investors in Chinese taxi-hailing app firm Didi Dache's
US$700 million fundraising.
Still, Temasek said it last year "pared" its holding in China
Construction Bank, one of China's biggest lenders. It also reduced
its stake in Chinese technology firm Alibaba from 10% to 2%
following the company's initial public offering last September, and
sold out of its investment in Chinese tech company Cloudary.
In all, Temasek invested S$30 billion and recouped S$19 billion
from asset sales last year. Its new investments included US$5.7
billion for a 25% stake in Hong Kong-based
drugstore-cum-supermarket chain A.S. Watson—one of Temasek's
largest-ever investments—and an additional US$800 million stake in
U.S.-based biopharmaceutical company Gilead Sciences. It meanwhile
sold stakes in companies including Canadian potash producer Mosaic,
and Indian pharmaceutical company Medreich.
Temasek's Senior Managing Director of Investment Ravi Lambah
said that Greece's economic crisis could have a "destabilizing
effect" on Europe and that markets were entering "uncharted
territory" as a result. He said a potential Greece exit from the
eurozone would be unlikely to trigger contagion in other European
economies.
Established in 1974, Temasek owns controlling stakes in some of
Singapore's biggest corporations, including Singapore Airlines Ltd.
and PSA Singapore, one of the world's largest port operators.
Singapore Telecommunications Ltd. alone accounted for 13% of
Temasek's portfolio as of March.
Temasek executives said the company's chief executive Ho Ching,
who is also the wife of Singapore Prime Minister Lee Hsien Loong,
would return as scheduled from her three-month part-time
sabbatical, which began in April.
Write to P.R. Venkat at venkat.pr@wsj.com and Jake Maxwell Watts
at jake.watts@wsj.com
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