Thai investment contributes to Temasek's woes

Singapore state investor Temasek, which owns stakes in Barclays, Standard Chartered, and Chinese banks, said full-year profit fell 29 percent, hit by Thai telecom firm Shin Corp and lower divestment gains.

Temasek, one of a growing stable of huge state investment funds with deep pockets and global ambitions, said yesterday that net profit fell to S$9.1 billion ($6 billion) in the year ending March 31, from S$12.8 billion a year ago.

"This drop is partly due to lower realized gains," Temasek's Chairman S. Dhanabalan said in the firm's annual report, "and partly due to the impairment charge of our investment in Shin Corp."

A Temasek-led consortium bought Shin, Thailand's biggest telecom firm, from former prime minister Thaksin Shinawatra last year for $3.8 billion. The sale of Shin helped spark a prolonged political crisis in Bangkok.

Temasek said it had made S$16 billion of new investments in its 2006/07 financial year, against S$21 billion in the previous year. It divested assets of over S$5 billion, against S$13 billion a year ago.

Temasek's portfolio value increased 35 percent to $108 billion from $80 billion, it said in its annual review, published yesterday.

Last month, the state fund agreed to invest up to 2.1 billion pounds in British bank Barclays Plc.

"Temasek's investment outlook remains one of caution in light of medium-term geo-economic risks and signs of bubbly market conditions" Dhanabalan said in the review.

Temasek has expanded aggressively in Asia since 2002 in an effort to boost its long-term investment returns.

Temasek reported a one-year total shareholder return by market value of 27 percent - compared with a return of 32.6 percent on the city-state's Straits Times Index (STI), and a 20.7 percent return for a benchmark consisting of one third MSCI Singapore, the World, and Asia-Pacific excluding Japan.

Over a 10-year period, its total shareholder return of 8 percent compared with 9.3 percent for STI, and 7.9 percent for the MSCI index.

Temasek, which is headed by Ho Ching, the wife of Prime Minister Lee Hsien Loong, owns large stakes in many of Singapore's biggest firms, including Singapore Telecommunications, DBS Group Holdings, Singapore Airlines, and PSA International.

Temasek said that Singapore accounted for 38 percent of its total portfolio at the end of March, down from 44 percent in the previous financial year. Asia ex-Japan accounted for 40 percent of the portfolio, up from 34 percent in the previous year.

Agencies

(China Daily 08/03/2007 page16)