The Singaporean sovereign wealth fund Temasek has closed its 2023 financial year, which ended last March, with a return of -5.07%, after the positive return of 5.81% the previous year, which is the worst result of the investment vehicle since 2016. according to data published this Tuesday. In his last financial year, which was affected by fiascoes such as his investment in the FTX cryptocurrency platform, the net value of Temasek’s portfolio experienced a 5.2% drop, to 382,000 million Singapore dollars (258,162 million euros). .
Thus, at the end of the fiscal year, Temasek posted a net loss of 7,000 million Singapore dollars (4,700 million euros), compared to the net profit of 11,000 million Singapore dollars (7,434 million euros) in the previous year. “In the last year, we have found ourselves with persistent multiple inflation despite rate hikes by central banks,” said the entity, which attributes the marked change in the globalization process, which has been the mainstay of world growth in the last 20 years, to the intensification of geopolitical tensions, together with the rise of nationalism and protectionism.
“The confluence of these events, not seen in decades, has raised the cost of capital and weighed down capital flows,” Temasek explained, adding that these circumstances also affected the pace of the energy transition, given a greater demand for security and energy resilience. Temasek’s portfolio remained anchored in Asia, with an exposure of 63%, with a prominent presence in Singapore (28%) and China (22%), while in America the exposure reached 21%. The underlying exposure to developed economies, including Singapore, North America, Europe, and Australia & New Zealand was 64%, compared to 58% in 2013.
In this sense, the entity has plans to open a new office in Paris to expand its global presence in geographies where it appreciates the opportunity to allocate significant capital for growth. “Our new Paris office will complement our London and Brussels offices to strengthen Temasek’s global network and grow our talent pool in Europe and, in particular, the European Union, as well as extend our reach into the Middle East regions. and Africa,” the fund explained.
Threat of recession in developed economies
Looking ahead, Temasek has announced that the global economy remains fragile amid geopolitical developments such as US-China tensions and the effects of the Russia-Ukraine war, while monetary policy remains tight to world level with high interest rates while inflation remains high. “Global growth is likely to slow down,” the fund has indicated, for which recession risks “loom in key developed markets”, which could be exacerbated by events such as the recent episode of banking stress, which resulted in a slowdown in loan growth, particularly in the US.
“We maintain a cautious investment stance and expect to invest at a moderate pace this financial year, given the challenging macroeconomic environment,” said Rohit Sipahimalani, Temasek’s chief investment officer. However, the executive has stressed that, given the fund’s strong liquidity position, Temasek is ready to increase its investments in the event of a market correction.
