In a surprising move, Temasek Holdings said on Friday that Charles "Chip" Goodyear will replace Ho Ching as chief executive officer on October 1 this year. The former boss of the leading Anglo-Australian mining group, BHP Billiton, will be the first foreigner to run Temasek, one of two Singapore government investment companies, which had assets worth S$185 billion ($123 billion) as of March 30, 2008, according to the latest information on its website.

Goodyear left BHP Billiton in early 2008, having joined as CFO in 1999 after a career as an investment banker at Kidder Peabody. He joined Temasek's board on February 1 and will take on the title of CEO-designate from March 1. His appointment suggests that a redirection of the fund's investments towards the natural resources sector is likely. Last year, Temasek said that it was looking for investments in Brazil and Mexico to tap growth in Latin America's emerging economies and strong demand for commodities. Natural resources currently make up just 5% of Temasek's assets.  

The departure of Ho Ching, who is married to Singapore prime minister Lee Hsien Loong and is the daughter-in-law of the city-state's minister mentor Lee Kuan Yew, comes during a global market meltdown that has rapidly eroded the value of many of the fund's investments.

Temasek has made high-profile investments in financial and telecom stocks as it has realigned its portfolio away from a concentration in domestic assets towards other Asian markets and Western banking groups. According to its most recent annual report, two-thirds of its investments are in those two sectors; the release of its fiscal 2009 results in August will show how badly they have been affected by the collapse in stockmarkets.

Temasek bought a 20% stake in Standard Chartered in 2006, but it was its combined $5.3 billion investment in Merrill Lynch in December 2007 and July last year, and its £2.1 billion ($3.1billion) investment in Barclays in 2007 that have attracted most attention and which have caused the most pain. Temasek is estimated to have suffered unrealised losses of more than $2 billion on its Merrill holding, which has since been converted into Bank of America stock. Temasek now owns 3.8% of Bank of America. Meanwhile, Barclays' share price has fallen to about £1 from more than £7 when Temasek bought its shares 18 months ago. The group has also seen the value of its shares in other banks, including Bank of China and China Construction Bank, fall from their highs.

Temasek is the smaller of Singapore's two investment companies. The Government of Singapore Investment Corp (GIC) manages an estimated $300 billion, but has also suffered losses from its investments in two other Western banks, Citigroup and UBS.

Temasek's chairman, S Dhanabalan, told journalists at a media briefing on Friday that Ho's decision to step down was not linked to the fund's performance and it was too early to determine if investments made in the past two years would lose money in the long run. Instead, he said: "If we are to bring in new leadership, it would be just as good a time as any to involve a new leader in this review."

After a period working at Singapore's ministry of defence, Ho became a director of Temasek in January 2002 and became CEO two years later, with a mandate to revamp the fund's holdings. She had aimed to diversify the fund's portfolio with about a third invested in Singapore, a third elsewhere in Asia, and the rest in developed economies. A clear investment philosophy was to invest in industries which should grow in tandem with an expansion of the region's middle class, such as healthcare and education providers. Banking and telecoms also entered the fund's radar.

Temasek, which was set up by the government in 1974, has always stated that its investment decisions are made without state involvement. But, the investment company has attracted controversy. For instance, there was disquiet surrounding Temasek's purchase in 2006 of Thai telecom firm Shin Corp from the family of Thaksin Shinawatra who was then prime minister. Subsequent street protests in Bangkok led to Shinawatra's removal from office.

In Indonesia too, Temasek has faced opposition for taking controlling stakes in both the telecom and banking sectors and has been forced to make divestments.

But, during Ho's tenure, Temasek has also remained a dominant force in Singapore, holding controlling stakes in leading domestic companies such as Singapore Airlines, Singapore Telecommunications and DBS Group, in which it has a 28% stake.

DBS has its own problems. Its chief executive, Richard Stanley, was diagnosed with leukaemia a few days ago and will be away for up to six months after just eight months at the helm. In the meantime, the bank's chairman, Koh Boon Hwee, will take over. DBS releases its quarterly results on February 13 after completing a successful S$4.1 billion rights issue two weeks ago. In December, the bank predicted that its fourth-quarter profit is likely to be lower than in the previous three months.

Temasek is expected to post its worst ever returns in the current fiscal year after generating an impressive annual average return of between 17% and 18% since its inception.