Temasek’s China investments continue to suffer while new bets on chip makers TSMC, Nvidia unrewarded

·4-min read

Temasek Holdings continued to suffer from its steadfast view on China’s outlook last quarter as Covid-19 lockdowns inflicted losses on its stock holdings from Alibaba Group Holding to Didi Global. New bets on Taiwan Semiconductor Manufacturing Company and Nvidia also flopped.

It incurred at least US$532 million of erosion in the value of American depositary shares in 10 Chinese companies during the first three months of the year, according to its 13F report late Monday. Overall, the value of its portfolio declined by about US$4 billion from the end of 2021.

The Singapore state investment firm maintained its stake in Alibaba and bought additional shares in ride-hailing group Didi Global, biotech firm BeiGene, and e-commerce operator Pinduoduo, the regulatory filing showed. The three stocks tumbled by 21 per cent to 50 per cent in New York during the quarter, according to Bloomberg data.

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Chief Investment Officer Rohit Sipahimalani. Photo: Handout
Chief Investment Officer Rohit Sipahimalani. Photo: Handout

The struggle underscores the crisis caused by China’s hardline zero-Covid strategy, which has led to a full lockdown in Shanghai and 40 other municipalities and provinces responsible for about 30 per cent of national output.

Investors are worried that the market has become “uninvestable” amid factory shutdowns, supply-chain disruptions and delisting risks. An aggressive US policy tightening has also fanned a stock sell-off this year.

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“[China] is one of the fastest-growing large economies,” Temasek’s chief investment officer Rohit Sipahimalani said in a Bloomberg TV interview on May 4. “You cannot not be invested in China. There is a clear intention from the government to revive growth.”

Temasek declined to comment on an email request from the Post.

The MSCI China Index, which tracks 744 Chinese firms, slid 14 per cent last quarter, erasing US$1.4 trillion in market value in one of the most volatile trading months when prices swung by more than 10 per cent on some days. The Nasdaq Golden Dragon China Index slumped over 21 per cent in the same period.

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China’s economic challenges have prompted Swiss private bank Union Bancaire Privee to exit the market in March, while the world’s biggest money manager, BlackRock, cut its bullish view on Chinese stocks and bonds on May 9.

Elsewhere, the Singapore state investor made new bets in the chip sector amid a global supply shortage, picking up shares in semiconductor giants TSMC and Nvidia at US$104.26 and US$272.86 each on average, according to the 13F filing. The stocks recently traded at about US$90 and US$173, respectively.

Among Singapore-based targets, Temasek retained its stake in Grab Holdings which shrank by US$36 million in market value. Its holding in Sea Ltd fell by US$81 million despite having boosted its ownership by about 48 per cent.

On a whole, Temasek has been rolling back some of its China bets made in 2021 after taking a big knock. The firm inadvertently stepped into a regulatory landmine by picking up Chinese education and technology stocks and participating in Didi Global’s stock offering in the second quarter, just before a trillion-dollar drubbing in Chinese tech stocks at home and abroad.

It cut losses on these stocks by the third quarter, exiting Baidu, Kanzhun, TAL Education, New Oriental Education Technology. Throughout 2021, Temasek added holdings in BeiGene and Pinduoduo, while making new bets in e-commerce giant and biopharmaceutical firm I-Mab.

In the first quarter, Temasek listed holdings in 96 global companies including, Starbucks and Visa with a combined market value of US$23.7 billion on March 31, according to its filing. The firm’s portfolio of 95 companies was pegged at US$27.7 billion on December 31.

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