Temasek turns cautious on outlook, sees more market declines

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Temasek expects to see continued asset declines this year and possibly into 2023 📉

The US$287 billion firm said it will slow its pace of investments and take a cautious stance given the likelihood of a recession in developed markets. — Singapore’s state-owned investor Temasek Holdings Pte Ltd said it’s adopting a cautious outlook and sees more market declines after posting a 5.8% return for its latest fiscal year as gains in domestic stocks offset widespread declines in China.

Temasek expects to see continued asset declines this year and possibly into 2023, with the bear market only turning around when the US Federal Reserve indicates it will stop tightening, said Chief Investment Officer Rohit Sipahimalani.The U.S. and Europe could see more downside as corporate profit growth slows with rates moving higher, he added in an interview with Bloomberg Television after the release of the annual report.

Publicly listed companies in Singapore also bolstered Temasek’s returns for the year. Singapore Telecommunications Ltd. gained 11% for the period including dividends, while DBS Group Holdings Ltd., the country’s biggest bank, returned 29%. The domestic investments offset declines in China, where the main stock gauge slumped 16% for the period. Temasek’s stock holdings have included Industrial & Commercial Bank of China Ltd. and Alibaba Group Holding Ltd., which plunged about 50% for the year.

“While the second quarter was very bad, that was probably the worst and we probably have upside from here in terms of growth,” he said in the television interview. “Having said that, if there’s a recession in the U.S. and Europe, that would be a strong headwind for China too.”

 

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