Temasek’s shrinking China holdings don’t mean it’s leaving
At first glance, Temasek’s long-standing ardour for China seems to be fading. Its mainland holdings have had a shocker of a year, but the Singapore fund is buying.
Is Temasek tempering its affection for China? The most striking figure beneath the 5.81% total shareholder return in the year to March 31, 2022, at Singapore’s equity-focused sovereign wealth vehicle was the fall in allocations to China from 29% to 22% of the portfolio in the space of just two years.
There is perhaps no other sovereign wealth vehicle in the world as exposed to China as Temasek, including China’s own sovereign fund (China Investment Corporation, which invests globally, some ring-fenced holdings in state banks notwithstanding).
Over the years Temasek has been a big backer of companies, from China Construction Bank to Alibaba, and it has tended to do exceptionally well out of its positions.
But Temasek’s review period coincided with spirited debate about whether or not China’s unpredictable attitude towards regulation – particularly in the tech sector, to which Temasek is notably exposed – rendered it uninvestable from a risk-reward perspective.
Temasek was an investor in Didi, for example, whose dismal aftermarket performance in its $4.4 billion IPO last year was triggered by a Chinese state probe into data security just days after the ride-hailing company’s listing in New York.