Temasek takes $39bn hit from crisis

The annual report, released yesterday, shows that total assets of Temasek Holdings, the 35-year-old investment fund of Singapore's Government, fell to $S247.9 billion in March, from $S295.5 billion in March last year. Financial assets fell to $S40.2 billion, from $S73.8 billion.

The fund announced yesterday that Ho Ching would stay on as chief executive, following the controversial departure of her appointed successor, former BHP Billiton chief executive Chip Goodyear, a few months ago.

Although profit plummeted to $S6 billion from $S18 billion, Temasek said the outlook for the current year was good, with the portfolio's net value gaining $S42 billion since March 31.

"This drop in group profit reflected the generally weaker operating performances of our portfolio companies as well as realised gains and losses from our divestments during the year," Temasek chairman S. Dhanabalan said yesterday.

"We rebalanced our portfolio with $S9 billion of investments and $S16 billion of divestments during the year." The fund would continue to shift its investment focus from OECD economies to Asian and Latin American economies, Ms Ho said, because "as Asia progresses, it will continue to de-risk".

Temasek opened offices in Hanoi, Chennai, Mexico City and Sao Paulo last year as part of its focus on developing economies.

Ms Ho is married to Singapore's Prime Minister, Lee Hsien Loong, and was due to be replaced by Mr Goodyear in October, after five years running the fund.

Many believed Mr Goodyear's appointment would bring a new era of transparency and investment strategy to Temasek, but in July, he and Ms Ho announced they had "mutually agreed" to terminate the relationship.

Neither Temasek nor the Singaporean Government has explained why Mr Goodyear left.

Much of last year's financial loss was attributed to Temasek's $US5 billion investment in Merrill Lynch, which was sold to Bank of America on September 16 last year at a big discount of $US50 billion after its near collapse. Estimates of Temasek's loss range from $US3 billion to $US4 billion.

"I think, like investors everywhere, they're just relieved that the market pulled back from the brink," said David Cohen, director of Action Economics in Singapore.

"Everyone with an exposure to equities certainly felt the losses but I think they had the patient attitude that allowed them to participate in the rebound, and going forward, maybe they'll have to fine-tune their strategy a bit."