SINGAPORE, July 11 (Reuters) - Temasek Holdings reported a record portfolio value for previous year as rallying global stocks helped rake in positive returns, but the Singapore state investor also almost halved its new investments reflecting a cautious approach to markets.
Temasek invested S$16 billion in the year that just ended, versus S$30 billion in each of the past two years, and divested S$18 billion - resulting in a net divestment position for the first time since the year to March 2009.
It was the first time the portfolio had declined since 2009, which was during the global financial crisis.
He said Temasek continued to focus on new longer term opportunities such as technology, life sciences, agribusiness, non-bank financial services, consumer, and energy and resources. Over the last six years, its investments in these areas have risen from 8 per cent of its portfolio to 24 per cent last year, "delivering better returns than our average return from our portfolio as a whole", Mr Lee said.
"For most of the markets, the forward price-to-earnings ratio is now pretty close to the historical 5-year maximum levels, suggesting that valuations are a bit stretched relative to their recent history", said Temasek's Buchanan.
Among Temasek's large holdings, shares of DBS rose around 27 percent over the fiscal year, while shares of SingTel were up around 4.5 percent.
But on the downside, shares of Singapore Airlines tumbled almost 12 percent during the fiscal year.
Temasek has also been betting on the delivery end of e-commerce, with a stake in Chinese express delivery company ZTO Express, which delivers packages for JD.com and Alibaba.
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Its key divestments during the year included Synchrony Financial, Bharti Airtel, LafargeHolcim and Evonik Industries, as well as part of its stake in Intouch Holdings.
The company also committed $800 million to Verily Life Sciences, which was spun off from Google.
Temasek also acquired all the minority shares in Singapore transport operator SMRT and delisted it from the Singapore Exchange.
Singapore's state-owned investment fund Temasek was expected to report a sharp recovery in portfolio value, according to one investment bank's estimate.
Temasek, however, struck a cautious note and said high market valuations meant it was finding it tougher to strike deals that would make enough returns to hit internal targets, echoing a similar view from GIC earlier this week. "As a long-term value investor, we remain cautious and recognise that to generate good real returns over time, we have to be prepared for periods of underperformance relative to the market indices, some even for a stretch of several years".
The Sovereign Wealth Center recently estimated GIC's portfolio was valued at $353.6 billion.
Clarification: This article was updated to reflect the currency conversion rate at the end of the fiscal year.
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