The Dutch pension asset manager's Asia Pacific head of real estate says his team has just had one of its busiest years ever and that 2021 is looking similarly promising.
In the 20 years after Temasek Holdings was formed in 1974 as an investment arm of the Singapore government, the key reforms in the island-state included the opening up of its markets and a resolve to have financial discipline.
ôThe government also welcomed foreign direct investment at a time when this was branded as æeconomic colonialismÆ and as a result Singapore grew," Temasek executive director and CEO Ho Ching said in a luncheon speech given at an annual Morgan Stanley investment conference in Singapore. ôIf you look back over the past 15 years, we have seen Asia do the same thing û introducing reforms, opening up, moving to a market economy and welcoming FDI.ö
Supported by the massive growth of China and India and a growing middle class, emerging Asia remains a continent on the move and is no longer just a destination for investments, but also a source of FDI into other parts of the world, Ho said, noting that Indian companies were the third largest group of investors into the UK last year behind the US and Japan.
To make the most of the regional developments, exemplified by almost 400 million people being lifted out of poverty in China alone over the past two decades, Ho said Temasek has adopted four key investment themes. One of those relates to companies and sectors that serve as a proxy for the economy as a whole.
ôWe look for sectors like infrastructure, transport & logistics, banking, services and financials because these are broad-based reflections of the economic opportunities. A second theme is to focus on services, products or companies that serve the middle class. This includes consumer banking and telecommunications,ö Ho said.
The latter in particular has received a lot of publicity in the past year as Temasek has made a series of high-profile investments into Chinese banks, including China Construction Bank, Bank of China and Industrial and Commercial Bank of China.
According to the companyÆs website, the other two investment themes are to focus on competitive advantages and emerging regional champions. The website also notes that Temasek had $82 billion of assets in its portfolio as of March 2006, of which 44% was invested in Singapore, 34% in the rest of Asia including Japan, 20% in the OECD countries and a modest 2% in other countries.
The portion invested in Asia had grown from just 19% 12 months earlier.
While Temasek still holds controlling stakes in many Singapore companies involved in the provision of basic services and infrastructure to the city-state, such as ports, airlines, banks and telecommunications, Ho stressed that the companyÆs mandate is not to participate directly in the Singapore development story.
ôTemasek was deliberately incorporated as a company (with the government as its only shareholder) so that it has the operational and financial discipline to be run commercially, away from the policy-making and regulatory roles of the government. When we invest we invest strictly for returns,ö she said.
Asked about the outcome of the recent elections in the US and its potential impact on Asia, Ho noted that US politics have ôclearly taken a turn from the centrist position 10 years agoö and this mood change is resulting in some concerns for Asia.
ôThe first issue is whether there is an increase of protectionism or nationalism in the US that could create a wave that will ripple through the world. Second, is how they handle Iraq and Iran.ö
ôThis is a difficult situation and not one for which you can find easy solutions, but if mishandled it is a problem that is going to affect the world probably for three, four, five decades. So issues of stability, terrorism, religious fundamentalism and reactions against that are issues that will concern Asia as a whole,ö she said.
Malaysia's Armed Forces Fund hires new CEO; Canada's Omers appoints Asia capital markets managing director; HSBC Asset Management creates alternatives unit, appoints CIO as its head; Bank of Singapore names global wealth head; Aware Super hires IFA head; Hong Kong names acting head for MPFA; Schroders adding to Asia ESG headcount; and more.
The French fund house becomes the world’s largest responsible asset manager to help asset owners implement sustainable investing, underlining its serious commitment to ESG.
The long-waited infrastructure Reits have finally arrived in China and, while experts see a slow start with hurdles ahead, they say it will later move to a 'big bang'.
AsianInvestor reveals the second half of the standout funds in our latest awards, including equity funds, the top Reit and the best smart beta vehicle.