Temasek Holdings reports S$7.3 Billion loss for FY2023, while Norway’s Sovereign Wealth Fund sees a US$84 billion quarterly profit

It was reported that Singapore’s sovereign wealth fund (SWF), Temasek Holdings lost S$7.3 billion for the financial year 2023.

Temasek revealed that its net portfolio value went down 5.2% from the previous year’s S$403 to S$382 billion. It also reported a one-year total shareholder return (TSR) of -5.07%.

Temasek said that the loss was primarily due to changes in accounting standards but it marks the first instance of a reported loss since the new accounting standards were implemented in 2018 as disclosed by Temasek’s chief financial officer, Png Chin Yee.

Investment activities for FY2023 saw Temasek invest S$31 billion and divest S$27 billion, resulting in a net investment of S$4 billion. The investment pace was curtailed due to a cautious approach amidst global uncertainties and a slowdown in global deal activity as liquidity tightened.

As of March 31, Temasek’s portfolio was primarily anchored in Asia, accounting for 63% of its total. Singapore, China, and the Americas continued to be the largest markets by underlying exposure at 28%, 22%, and 21% respectively.

In terms of sectors, transportation and industrials comprised 23% of Temasek’s portfolio, up by one percentage point year-on-year. Financial services dropped to second place at 21%, down by two percentage points, with telecommunications, media, and technology rounding off the top three at 17%.

Last year, the group’s decision to invest in crypto firm FTX led to a write-down of over US$275 million (~ S$369 million) in November 2022.

Despite this, Chief Investment Officer Rohit Sipahimalani, who graduated from St. Stephen’s College in Delhi, stressed that the decision was part of their early-stage investing portfolio and risks were mitigated by limiting the investment to less than 6% of its overall portfolio.

Norway’s sovereign wealth fund makes money

Meanwhile, it was reported in April that Norway’s $1.4 trillion SWF, Government Pension Fund Global, posted a US$84 billion (S$112 billion) quarterly profit.

It, in fact, posted a 5.9% return on investment for the first quarter, boosted by rising equity markets.

Despite market turmoil in March amid concerns of a new banking crisis, equity markets provided the biggest boost for the fund, with a nearly 8% gain, the Norwegian fund said.

“The rise of the equity market was to a great extent driven by the technology and consumer discretionary sector,” it said in a statement.

Norway has a population of just 5.5 million, meaning the result works out to more than US$15,000 per person. Its sovereign wealth fund has been posting positive annual relative returns since 2009.

Some 70% of the assets were held in stocks as of March 31, while 27.3% was invested in fixed income, 2.4% in unlisted real estate and 0.1% in unlisted renewable energy infrastructure.

Norway’s central bank manages the fund, which owns 1.5% of all globally listed shares and has stakes in 9,200 companies.

Differences between Norway SWF and Temasek

All investments made by the Norwegian SWF are transparent and publicly available on its website, regardless of whether one is a Norwegian citizen.

In contrast, Temasek only releases consolidated accounts which do not disclose the flow of funds between subsidiary investments, and it appears not all of its investments are listed on its website.

This contrast is also evident in the disclosure of salaries within the SWFs. The Norwegian SWF publishes the salary of its CEO, along with the range of salaries paid to its employees.

For instance, it is public knowledge that Mr Nicolai Tangen, CEO at Norges Bank Investment Management, who manages the SWF, earns an annual salary of US$6.87 million.

On the other hand, Temasek asserts that there is no necessity to disclose the salaries paid to its management, including the CEO, citing its status as a private exempt company.

In its latest annual report, Temasek recorded an administrative expense of S$10.4 billion (US$7.77 billion) for its staff count of 957 employees as of 31 March 2023. In stark contrast, the Norwegian SWF reported a total salary payout of US$1.22 billion for a staff count of 582.