Temasek upbeat on China, seeks more bank, tech investments

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#1
Reuters

Tuesday, Jul 08, 2014

SINGAPORE - Singapore sovereign investor Temasek Holdings wants to increase its holdings in China's financial services and technology sectors, banking on the long-term growth prospects of the world's second largest economy.

Temasek Holdings Pte Ltd, which has two-thirds of its assets in Singapore, China and Australia, poured S$24 billion into new investments in the financial year ending March, a 20 per cent increase from the previous year and the largest amount since the 2008 global financial crisis.

The increase coincided with slower growth in its portfolio, which was hurt by weakness in Asian stocks and banks such as Standard Chartered. "China's economic reforms will present opportunities for long-term investors such as Temasek," China head Wu Yibing told reporters as the state investor outlined its investment strategy and outlook for the current financial year.

He said Temasek would continue to invest in Chinese banks, which he called a "good proxy for long term growth for the Chinese economy". Temasek is ranked as the world's tenth biggest state-backed fund by the Sovereign Wealth Fund Institute.

In addition to banks, Wu said the Temasek was interested in China's healthcare, resources and technology sectors, especially mobile Internet. The state investor owns a stake in Chinese e-commerce giant Alibaba Group Holding Ltd.

The World Bank expects China's economy to grow 7.6 per cent this year, as a recovery takes hold after a series of government stimulus measures. A recent Reuters poll forecast economic growth either stablised or edged up in the second-quarter, reinforcing the view that authorities have successfully arrested a cooldown.

DIVERSIFYING INVESTMENTS

Temasek has faced criticism in recent years for its large exposure to the financial services sector, which accounted for a third of its portfolio last year.

Some analysts, however, said they expect its investments in China's financial sector to pay off in the long-term. "They are some of the cheapest banks in the world and so much of what is going on has been discounted," said Hong Kong-based equity research analyst Paul Schulte, who has more than 20 years of experience in investment banks and hedge funds.

Chinese banks are facing a spike in bad debts triggered by the slowdown in the economy and rising competition from online financial service providers. Interest margins, which helped prop up profits, are expected to fall in the long run.

Temasek owns a 6 per cent stake in China Construction Bank and a 2 per cent stake in Industrial and Commercial Bank of China. It also has holdings in other banks, including a stake of just under 18 per cent in British lender Standard Chartered and took a 1.1 per cent stake in Lloyd Banking Group last financial year.

Temasek has also been increasing investments in private companies to capitalise on future listing of these firms and to move away from financial services.

In March, Temasek bought a stake in Hong Kong-based, unlisted health retailer A.S. Watson. A Temasek-led group also took control of commodity trader Olam.

Temasek also invested almost $1 billion in biotechnology firm Gilead Sciences and $500 million in lab equipment provider Thermo Fisher Scientific last year.

But its performance has often lagged some of its own internal metrics in recent years as it focused on listed stocks, which are exposed to swings in stock markets.

Temasek's report showed that its so-called Wealth Added, which it uses to determine the bonus pool, fell below its cost of capital for the fifth time in the last seven financial years Its portfolio size rose by 3.72 per cent to a record S$223 billion ($179 billion) in the financial year, a slower pace from the 8.6 per cent growth in the previous year.

It posted a total shareholder return of 1.5 per cent annualised in Singapore dollar terms up to March 2014, versus 8.86 per cent return in the previous year.

http://news.asiaone.com/news/business/te...nvestments
Research, research and research - Please do your own due diligence (DYODD) before you invest - Any reliance on my analysis is SOLELY at your own risk.
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#2
Think the guys at Temasek needs to read vb more often... 1.5% TSR on the back of a year where easy $ has been made due to the global liquidity rush is simply too miserable. If one can't make more reasonable returns in the current environment, when can we expect better performance?

But then again, vb won't understand how SWF functions as there is always an element of strategic decisions to be made over the wrong term...

http://www.todayonline.com/business/tema...ate-growth

business

Singapore's Central Business District skyline. Photo: Koh Mui Fong
Shareholder return for last financial year was 1.5 per cent, amid regional market weakness
BY
WONG WEI HAN
PUBLISHED: JULY 8, 3:00 PM
SINGAPORE — Temasek’s net portfolio value grew to a record high S$223 billion in the financial year ended March 2014, up slightly from 2013’s S$215 billion as the state investor saw its assets suffer from market weaknesses in Asia.

As a result, Temasek’s one-year total shareholder return came in at 1.5 per cent in SGD terms, while group net profit held at S$11 billion.

Up to 56 per cent of Temasek’s portfolio is in Singapore and China, where volatilities in stock markets have impacted its asset value. But the softer markets also led to lower prices and gave Temasek the opportunity to step up its new investments last year to S$24 billion — the most since 2007.
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#3
China has a population 2x the size of ASEAN combined. Not surprising if the focus continues to remain in China. If the vested company has a strong backer, why not. Moreover, I'm guessing its probably tough to find good investment opportunities as well given the kind of AUM size managed by Temasek Holdings (and GIC).

Just my 2c worth Smile

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Finding Value in a Speculative World!
http://www.valueinvestasia.com/
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#4
Ah Gong $, Ah Gong mentality and Ah Gong style... Too confusing for lay man like me to understand...

As far as I m concern, investment is about making $ not making excuses. Hence, I never believe in any fun managers.

GG

(09-07-2014, 05:59 PM)weilieh Wrote: China has a population 2x the size of ASEAN combined. Not surprising if the focus continues to remain in China. If the vested company has a strong backer, why not. Moreover, I'm guessing its probably tough to find good investment opportunities as well given the kind of AUM size managed by Temasek Holdings (and GIC).

Just my 2c worth Smile

----------------------------------------------------------------------
Finding Value in a Speculative World!
http://www.valueinvestasia.com/
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#5
Wonder if they ever considered to pickup some Berkshire Hathaway A shares (each one is USD $192,809 at today's price)

Much more quality than those S-Chip. Also provides indirect ownership of some of the best All American Companies...
Virtual currencies are worth virtually nothing.
http://thebluefund.blogspot.com
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#6
Goldman upbeat on China
The Australian |
June 26, 2014 12:00AM
Damon Kitney
Victorian Business Editor
Melbourne

ONE of the nation’s most powerful fund managers has just returned from China with some good news for naysayers on the world’s fastest-growing economy.

Dion Hershan, head of Australian equities at Goldman Sachs Asset Management, told clients yesterday that from what he saw, commodity-intensive industries in China continue to be faring well.

Demand is down from the boom times, but steel production is up 3-5 per cent so far this year, power generation is up 7.5 per cent, car sales are ahead 9 per cent and infrastructure fixed asset investment is up 22 per cent.

“There has been a lot of very tenuous commentary and analysis linking the ‘weakness’ in the Chinese economy and the recent plunge in the iron ore price (down 30 per cent in a quarter at a two-year low). It’s a simplistic classic bear argument,’’ Hershan said.

But that doesn’t mean iron ore producers are out of the woods. While steel production is up, low-cost iron ore supply is up 21 per cent so far this year and the earnings of BHP Billiton and Rio Tinto remain highly sensitive to the price falls.

“We continue to have a negative view on resources due to our supply thesis, rather than by virtue of being concerned about China,’’ Hershan said.

http://www.theaustralian.com.au/business...6966868244

________________________________________________________________________________________________________________
GE China chief upbeat on growth
Fergus Ryan |
20 May 2014,
Economy |
China

http://www.businessspectator.com.au/news...eat-growth

________________________________________________________________________________________________________________

BHP upbeat on Chinese growth
14 May 2014,
Industries |
Resources and Energy |
Economy |
China

http://www.businessspectator.com.au/news...ese-growth
Research, research and research - Please do your own due diligence (DYODD) before you invest - Any reliance on my analysis is SOLELY at your own risk.
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#7
Buffet is right, look at their 20 years annualised record (7%), these guys would have been better off investing in S&P500 index (9%) in US dollar terms.
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#8
(08-07-2014, 09:41 PM)greengiraffe Wrote: Think the guys at Temasek needs to read vb more often... 1.5% TSR on the back of a year where easy $ has been made due to the global liquidity rush is simply too miserable. If one can't make more reasonable returns in the current environment, when can we expect better performance?

But then again, vb won't understand how SWF functions as there is always an element of strategic decisions to be made over the wrong term...

There is a time for everything under the sun. In other words, every dog will have its day!

The dotcom investors were too blowing their trumpets over the value investors in 1999. Similarly, it is a tad too early to make such a comment over just 1 year's TSR. Temasek might be rejecting this 'race to the bottom' to bid up Greek/Spanish sovereign bonds or junk company bonds...Whether it will look silly or genius in the future, it will be for us to find out. Smile

P.S. They were made to look stupid when they (GIC/Temasek) bought into so called discounted Wall Street firms (Citibank,Merril Lynch, UBS) in 2008.

http://www.bloomberg.com/news/2014-07-07...unded.html
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