Singapore sovereign wealth fund Temasek Holdings – an early backer of Ant Group and ride-hailing giant Didi Chuxing – remains “bullish” on investing in China even as Beijing cracks down on the country’s high-flying technology sector.
China accounted for the largest part of the investor’s portfolio in the financial year ended in March, or about 27 per cent of its underlying assets, and executives said it will remain an important destination for investments in the future. Temasek’s net portfolio value hit a record S$381 billion (US$283 billion) in the 2021 financial year.
“[Regulation is] one of many risks in any country that we invest in,” said Mukul Chawla, Temasek’s joint head for telecom, media and technology. “It’s not just in China that we are mindful of regulation and changing regulation. I don’t believe it changes our stance on China in any way. We continue to invest. We continue to consider regulation as it comes forward.”
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Overall, Temasek’s investments in China rose by S$14 billion, even as it rebalanced its portfolio and increased its investment in the Americas in the 2021 financial year, according to Nagi Hamiyeh, the joint head of Temasek’s investment group.
Temasek had its biggest year for investments – S$49 billion and divestments – S$39 billion, as a number of its portfolio companies went public, including video-sharing platform Kuaishou Technology’s US$6.2 billion initial public offering in Hong Kong in February. Kuaishou was the biggest debut worldwide this year.
“It’s been a very active year for a number of our companies accessing the public markets. It speaks to the fact it’s been an attractive opportunity for a number of our companies as the trends that we leaned into have accelerated during the pandemic and presented an interesting opportunity for these companies to strengthen their balance sheets,” Chawla said.
Portfolio companies that listed in its financial year also included home-sharing portal Airbnb, food delivery app DoorDash and online gaming portal Roblox.
The fund’s profit reached S$57 billion in financial year 2021, compared with S$9 billion in the prior year.
However, Beijing’s decision to shelve the dual listings of Ant Group in Hong Kong and in Shanghai in November just days before they were set to happen and the latest tech crackdown following Didi’s US$4.4 billion IPO in New York have unnerved investors in the Chinese tech sector. Didi has lost some US$19 billion in market capitalisation since July 1 and is trading below its IPO price.
That is on top of American authorities threatening to delist Chinese companies in a long-running dispute over access to auditing papers for companies listed on US bourses and the US adding companies with ties to the Chinese military and the country’s surveillance apparatus to government blacklists.
Temasek remains confident that its investments in China can avoid any fallout from rising tensions between the United States and China, as they are focused on domestic trends in China: the future of consumption, longer lifespans, sustainable living and digitisation, according to Hamiyeh.
“All the investments we make in China are domestic in nature. They do not rely on import or export,” Hamiyeh said. “While we keep monitoring the situation about the tension between the US and China, both the US and China are very important investment destinations for us and we will continue investing.”
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