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Capital Markets

Inside Temasek’s response to Covid

Singapore’s state-owned investment company entered the pandemic in good shape. Covid-19 brought new challenges in which it has emerged as a double-barreled weapon against uncertainty. The fund’s chief investment strategist explains what makes Singapore’s intriguing sovereign wealth vehicle tick.


Temasek has always been one of the world’s most interesting sovereign wealth vehicles: in asset allocation, mandate and style it looks quite unlike most of the classic diversified sovereign funds.

But Covid-19 has made it more striking still, bringing into sharp relief its dual role as an unemotional long-term investor and as a steward with a duty of service to the nation.

There have been no clearer examples of this than Temasek’s role in the SIA (Singapore Airlines) capital raising, announced in March with a S$15 billion ($11 billion) target through a rights issue and a tranche of mandatory convertible bonds.

Temasek backstopped both, pledging not only to take up its own considerable entitlement as a 55% shareholder but also any shortfall.

In the event, Temasek’s underwriting of the deal persuaded the market to participate; the rights issue, though not the convertible, was fully subscribed.

So Temasek had achieved two things in one go: it had made an interesting long-term contrarian investment; and it had performed a national service in reviving confidence in a key Singaporean asset that was under enormous stress.

Goldman Sachs called it the “gold standard” of coronavirus-related rescue packages.


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