Singapore Diversifies Into LatAm

Temasek Holdings, the Singapore sovereign wealth fund, says it could invest more in LatAm, after making record profit in the last financial year. “While Temasek’s primary focus remains in Asia, it is open to deepening and broadening its exposure to other markets such as Russia and Latin America through funds and direct investments,” says the investor. Temasek is heard seeking to invest significant new funds in LatAm. In the financial year ended March 31, Temasek achieved record profit of S$18bn ($12.6bn) owing to strong operating performance at its portfolio companies and healthy realized gains from direct investment. Its portfolio grew to S$185bn, an increase of 13% year-on-year. For the first time ever, Temasek says its net investment outside Asia (S$10bn) exceeded net investments in Asia (S$5bn). In the preceding five years, Temasek had invested a net S$26bn in Asia and just under S$1 billion net in non-Asian economies. “Temasek’s underlying asset exposure to economies outside Asia increased from 22% of its portfolio to 26%, bolstered by investments such as Merrill Lynch in USA and investments in Latin America and Russia,” says the fund. Investment since 2002, when Temasek raised exposure to EM Asia, have delivered a 6-year annualized return of 32%, compared to 16% delivered by the rest of the portfolio. Financial services, telecommunications and media account for the bulk of Temasek’s portfolio. “These two sectors are good proxies for exposure to the potential presented by transforming economies and a growing middle class,” says Temasek. “The fallout of the credit crisis will continue to dampen the global economy over the next 24 months, with sharply escalated oil and food prices beginning to test inflation expectations,” says Temasek chairman S Dhanabalan.