ValueBuddies.com : Value Investing Forum - Singapore, Hong Kong, U.S.

Temasek's portfolio hits record $215b

Value up by 8.6% as firm soars on the back of global stock market rally

Published on Jul 05, 2013


Temasek Holdings rode the rally in Asian and global share markets last year to lift the value of its portfolio to a record-breaking $215 billion. -- ST FILE PHOTO: KUA CHEE SIONG

By Alvin Foo

TEMASEK Holdings rode the rally in Asian and global share markets last year to lift the value of its portfolio to a record-breaking $215 billion.

The turnaround allowed the Singapore investment firm to lift its portfolio value by 8.6 per cent in the 12 months to March 31.

It also notched up one-year shareholder returns of 8.86 per cent, well up on the paltry 1.5 per cent eked out a year earlier. Its investment returns support its dividends which go to its shareholder, the Finance Ministry.

There was a note of caution amid the bumper numbers yesterday, with chairman S. Dhanabalan noting: "Last year marked a turning point in the global economy. The severe disruptive risks from the global financial crisis subsided, but structural risks have not been completely resolved."

The portfolio's 8.86 per cent returns were beaten by MSCI Singapore, which tracks the local stock market and rose 12 per cent over the 12 months, while the MSCI World index gained 11 per cent. However, the one-year return for just its listed investments came to 13 per cent.

While Temasek benefited from the robust stock markets, the reverse also happens when markets sag, as chief executive Ho Ching noted: "We are almost entirely invested in equities. This means a lot more year-to-year volatility, as we have seen over the last 10 years."

But Temasek is prepared to weather the volatility. Ms Ho added: "A portfolio of mostly equities also means we expect higher returns over the long term."

CIMB regional economist Song Seng Wun said Temasek's performance was "within expectations, given the fairly strong performance of global and regional stock markets especially in the second half of last year".

Professor Melvyn Teo, director of the BNP Paribas Hedge Fund Centre at the Singapore Management University, said: "It's a good result, but the worry is going forward. The investment boom in China may be ending as credit is tightening there."

Asian stock markets have fallen in recent months due to concerns over monetary tightening and rising interest rates.

Temasek's investments remain focused on Asia with 71 per cent of its portfolio invested in the region as at March 31, with Singapore accounting for 30 per cent. Developed markets such as Europe and the US comprise 25 per cent of the portfolio and emerging markets, 4 per cent.

Temasek is looking further afield for opportunities in developed markets and plans to open offices in London and New York. It invested $20 billion and divested $13 billion during the year.

alfoo@sph.com.sg

No change to company's top leadership for now

Published on Jul 05, 2013

Members of Temasek’s senior management discussing the company’s performance at a briefing yesterday. They are (from left) Mr Rohit Sipahimalani, Mr Chia Song Hwee, Mr Boon Sim and Mr Stephen Forshaw. -- ST PHOTO: LAU FOOK KONG

By Aaron Low Assistant Money Editor

TEMASEK Holdings has an ongoing succession plan in place even as it said yesterday that there were no plans for changes in its top leadership.

Temasek's head of investments Chia Song Hwee told the media yesterday that both the firm's chairman and chief executive remain "very engaged" with the firm.

"Our chairman and CEO remain the same. They are very engaged with us," he said at Temasek's annual results briefing yesterday.

There has been perennial speculation over who will take over from CEO Ho Ching after then CEO-designate Charles Goodyear left the firm in 2009 citing "unresolved strategic differences".

More recently, there has been growing speculation over whether chairman S. Dhanabalan will step down and who will succeed him.

Mr Dhanabalan, 75, has served as Temasek chairman since 1996.

When asked if there are already shortlisted candidates for the posts of chairman and CEO, Mr Chia said that succession planning is an "ongoing process".

"It needs diligence and constant review. It is an ongoing process but right now there is no change," said Mr Chia, adding that succession planning remains a board decision.

One candidate who has surfaced as a possible successor to Mr Dhanabalan is Mr Lim Boon Heng, 65, a former Cabinet minister and the secretary-general of the National Trades Union Congress (NTUC) between 1993 and 2006.

For one thing, Mr Lim, who joined Temasek's board of directors just last year after retiring from politics, has been appointed as a member of Temasek's important executive committee, which has the authority to approve new investment decisions up to a certain threshold.

Adding fuel to the speculation was that apart from Mr Dhanabalan and Ms Ho Ching, Mr Lim was the only director who was quoted on the annual report's press statement yesterday. In it, Mr Lim spoke about providing for the next generation through Temasek's social outreach. "Our dividend contribution adds to the Budget of the Singapore Government, and helps to support programmes that deliver more social good to the public," he wrote.

One Temasek senior executive, who declined to be named, said: "It's of course not easy to find someone who has had the experience of Dhana, who was chairman at DBS and Singapore Airlines before he became Temasek chairman but Mr Lim has the right stature."

Mr Lim was in the Cabinet between 1993 and 2011. He is currently the deputy chairman of the Singapore Labour Foundation.

Singapore Management University finance professor Melvyn Teo said that if they were to decide to appoint him, it would be because of his background in politics rather than his financial experience. "It is probably more important that the incoming chair possesses the requisite management skills and has a strong sense of duty to the ultimate stakeholders of the fund, that is, Singaporeans," he said.

"Given Mr Lim's years of service... I believe that he is well qualified to take on that role."

aaronl@sph.com.sg

Quote:Total Shareholder Return
A key performance measure for Temasek is Total Shareholder Return (TSR), which excludes capital injections from, and includes dividends to, Temasek’s shareholder. This measures the compounded annual returns to our shareholder, the Government of Singapore. In Singapore dollar terms, our TSR for the year was 8.86%. Our three-year TSR was 4.94% compounded annually. Longer term 10-year and 20-year TSRs were 13% and 14% respectively. TSR since Temasek’s inception in 1974 was 16%.

http://www.indiainfoline.com/Markets/New...5723296502

I think those are pretty impressive numbers in its own right.

how come our cpf oa still getting 2.5% while Malaysia epf is giving at least 6%?

Our CPF OA rates are determined by "market-related interest rate based on the 12-month fixed deposit and month-end savings rates of the major local banks or 2.5%, whichever is higher"

Malaysia's EPF is determined by the returns of the fund.

Secondly, 228 Bil of our CPF asset out of 232B is invested in held to maturity with the SG govt yielding 2.5-5.0%. It is possible our Malaysian counterpart is more of a balanced fund approach ( e.g 60% in Malaysia bonds, 30% in equities, 10% cash). Hence you will need to see the portfolio composition of Malaysia's EPF to understand how come they are able to yield 6%

Link: http://mycpf.cpf.gov.sg/NR/rdonlyres/275...ements.pdf

(06-07-2013, 12:23 AM)CY09 Wrote: [ -> ]Our CPF OA rates are determined by "market-related interest rate based on the 12-month fixed deposit and month-end savings rates of the major local banks or 2.5%, whichever is higher"

Malaysia's EPF is determined by the returns of the fund.

Secondly, 228 Bil of our CPF asset out of 232B is invested in held to maturity with the SG govt yielding 2.5-5.0%. It is possible our Malaysian counterpart is more of a balanced fund approach ( e.g 60% in Malaysia bonds, 30% in equities, 10% cash). Hence you will need to see the portfolio composition of Malaysia's EPF to understand how come they are able to yield 6%

Link: http://mycpf.cpf.gov.sg/NR/rdonlyres/275...ements.pdf

didn't they just charge the various bank treasury desk dealers for fixing the interest rate?

The basis is the ACTUAL lending rate of banks, which is realistic, vs the silly SIBOR or LIBOR setting of out of thin air 11am quote which has been silly OTC practice that even lay man would ridiculed if they understood how "sophisticated" it was.

CPF are issued special bonds by the govt so that they get the guaranteed 2.5-4% rates even in this low interest rate environment.

how come our cpf return is not based on like epf - return on fund? since inherently I dun think our monieis is actually there, but used by layers after layers of instruments to make it appear that there is special bonds in place, but the underlying monies (which we are the beneficiary) has been used by someone up there but the juicy returns did not flow back to us.

(07-07-2013, 08:15 PM)pianist Wrote: [ -> ]how come our cpf return is not based on like epf - return on fund? since inherently I dun think our monieis is actually there, but used by layers after layers of instruments to make it appear that there is special bonds in place, but the underlying monies (which we are the beneficiary) has been used by someone up there but the juicy returns did not flow back to us.

do you get return of DBS as return of your deposit in POSB & DBS?

the same can be said about CPF, though CPF return should be quite low if I am not wrong. I belive that return of CPF is more about stability than yield.

(07-07-2013, 09:10 PM)freedom Wrote: [ -> ]do you get return of DBS as return of your deposit in POSB & DBS?
the same can be said about CPF, though CPF return should be quite low if I am not wrong. I belive that return of CPF is more about stability than yield.

how can the same be said when in the first place, cpf monies is not a deposit by any definition. it is if I am not wrong our retirement monies..if the return can't even beat inflation, it is basically meaningless to place it there while being used by someone up there to enrich themselves..

i always thought anyone who ever took a taxi would learn from the taxi driver that CPF is a big scam by the gamen to withhold and use your hard earned cash ..

Well thats what I learned from the ex-engineer taxi driver on my way to the airport few years back. He was like retired but still couldn't get his lump sum of CPF to use.