EMASEK Holdings has tweaked its long-term investment direction to focus more on Asia and emerging markets such as Brazil and Russia, with reduced emphasis on developed countries like the United States and Europe.
The approach - summed up as a '10-20-30-40' game plan - was outlined by outgoing chief executive Ho Ching to up-and-coming professionals from the civil, legal and uniformed services on Tuesday.
Ms Ho said the portfolio mix aims for about 10 per cent to Latin America, Russia and Africa and about 20 per cent to Organisation for Economic Cooperation and Development (OECD) countries, or the developed countries. That leaves 30 per cent for Singapore investments and the remaining 40 per cent for the rest of Asia.
This refines an earlier strategy where Temasek said it would park about one- third of its assets in Singapore, one- third in Asia, excluding Japan, and the rest in OECD countries.
The latest move signals Temasek's growing confidence about Asia's future, particularly in China and India.
In the last couple of years, the Singapore investment agency has invested in banks in the US - such as Merrill Lynch - as well as in European giants like Barclays.
Based on Temasek Review figures as at March 31, 2008, the $185 billion portfolio already reflected about 41 per cent being invested in Asia, 30 per cent in Singapore and about 23 per cent from OECD countries. As of Nov 30 last year, the portfolio value had dropped to about $127 billion, similar to March 2006 levels and a reflection of the bloodletting that has engulfed world share markets.
Ms Ho told the Junior Pyramid, a club that organises forums with top business and political leaders, that Temasek is increasingly more bullish about the region.
Temasek has been re-assessing its long-term portfolio balance in the past two years, looking at a balanced exposure between growth and risk, she said.
But 'as Asia continues to develop, it continues to de-risk. We are increasingly confident of Asia's future'.
Temasek debated if it should raise its long-term Asia exposure as well as add new regions to the mix.
It has settled on maintaining 40 per cent of its portfolio in the region.
Singapore will also stay at about 30 per cent but the OECD exposure will fall to 20 per cent and other geographies will come in at about 10 per cent.
The rebalancing is a 're-weighing of the growth trends and the changing risks over the next decade or two, particularly for Asia', said Ms Ho.
She said that these thoughts framed Temasek's decision to open new offices in Mexico and Brazil last year.
She added that it is likely that Temasek will sell bonds of different maturities in the future. Temasek made its first offering in 2005.
Ms Ho said that the bond spread - the difference in yields between two bonds - 'is like a singing canary in a coal mine'. The spread usually rises in tandem with how risky investors view the bonds. It is one of three public markers to show how Temasek is doing. The others are the annual Temasek Review and its credit rating.
Ms Ho said: 'In short, we will continue to invest like a 35-year-old with a dynamic balance for the long term. Half a century ago, one 35-year-old became the first prime minister of Singapore.
'We invest with the appetite of a young 35-year-old for growth and risk-taking.
'At the same time, we also share his thoughtful conservatism to plan and provide for his children's needs for another 10 to 20 years, while he invests to build his rainy day and retirement kitty with a 30- to 50-year horizon.'
Ms Ho is stepping down in October. The next Temasek Review, which covers the year to March 31, 2009, is likely to be out within the next few months.
