Business Times - 07 Jul 2010
It has been expanding into energy, commodities and agriculture
SINGAPORE wealth fund Temasek Holdings is expected to show the extent of its portfolio shift towards the resources sector and may provide clues about leadership changes when unveiling its annual report for 2009/10 this week.
The world's eighth-largest sovereign wealth fund may also respond to speculation that Singapore funds are in talks with BP Plc to take a strategic stake in the oil major as it struggles with a devastating oil leak in the Gulf of Mexico.
Temasek declined to comment on the speculation yesterday. With $172 billion in assets as at end-July 2009, Temasek could also reveal this month that it fared better for the year ended March 31 after assets fell 30 per cent in the prior year as the global financial crisis struck.
It has been expanding aggressively into energy, commodities and agriculture. Financials and telecoms, however, still account for the biggest share of its holdings.
'Temasek's move to resources is consistent with its goal of catering to Asia's emerging middle class,' said Melvyn Teo, director of the BNP Paribas Hedge Fund Centre at the Singapore Management University.
'Demand for resources will go up because of emerging economies like China but there is only so much supply, so prices will go up over time.'
The fund's recent investments include convertible preferred stock in US natural gas firm Chesapeake Energy and India's GMR Energy, and shares in Canadian platinum producer Platmin.
Singbridge, a wholly owned unit of Temasek, may invest in a $16 billion agricultural project in north-eastern China that would produce corn and soyabean for Chinese consumers and export pork, beef and dairy products to countries such as Japan, South Korea and Singapore.
According to Temasek's report for the year ended March 2009, the fund held about 5 per cent of its assets in energy and resources, unchanged from March 2008. That proportion could have risen to around 8 per cent by March 10 involving additional investment of about $4 billion, analysts said.
In 2009, investments in financial services comprised 33 per cent of the fund, while telecommunications and media made up 26 per cent.
The fund came in for some criticism last year over its loss-making investments in Western banks such as Bank of America/ Merrill Lynch and Barclays.
But things would have looked better for Temasek in the latest year as stock markets improved. MSCI's world equity index jumped 56 per cent in the 12 months to March 2010, while the MSCI Asia ex-Japan index gained 74 per cent.
Temasek may provide cues about when current CEO Ho Ching is expected to step down and who her successor might be.
Ms Ho was scheduled to leave Temasek in October last year but her designated successor, former BHP Billiton CEO Charles Goodyear, left in July, citing differences in strategy.
Temasek said in May that former Singapore Exchange CEO Hsieh Fu Hua would join Temasek as executive director and president in August to assist Ms Ho in areas such as talent development and succession planning.
Temasek may also shed more light on how it plans to build up Seatown, a multi-billion-dollar investment firm it set up earlier this year with staff seconded from Temasek. Sources said that Seatown aims to raise funds from external investors to earn fees as well as show foreign governments that Temasek was a financial investor with no political agenda. Seatown, the English word for 'Temasek', will in time allow ordinary Singaporeans to co-invest with the firm.
'I really hope to see more information about Seatown, as it adds an extra dimension to how Temasek is set up,' said SMU's Mr Teo. -- Reuters
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