Tough times: Feeble Asian markets drag Temasek’s FY14 returns

These are testing times indeed for Temasek. Singapore’s sovereign investor posted distinctly underwhelming shareholder returns in FY14, bogged down by weaknesses in the Singapore and China markets.

According to Temasek, the company ended FY14 with 41% of its portfolio exposure to key Asian markets excluding Singapore, while its portfolio exposure in Singapore stands at 31%.

“Over the last one year, our returns were impacted by the weakness of our key markets in Singapore and China. Our return of 1.5% last year was therefore less than our cost of capital of 8% for the year,” said Rohit Sipahimalani in yesterday’s Temasek Review.

Here’s more:

“Anyway, as you have pointed out, our returns for the year were moderate, driven by the weakness in our key markets in Asia. We, however, saw the weakness in the markets as an opportunity to significantly step up our investments.

Last year was the most active year for us in terms of new investments since the global financial crisis. We also opened offices in the US and Europe and stepped up activities of our Enterprise Development Group, which is focused on building new businesses.

So in summary, our returns for the year were modest reflecting the weakness in Singapore and China. However, our long term returns continue to be robust.

Our 5 and 10-year returns have met or exceeded our cost of capital. We are excited with the opportunities we see and we see many of them ahead of us and we believe that our strong balance sheet and liquidity gives us full financial flexibility to respond to these opportunities.” said Sipahimalani.