From Our Chairman

2024 is a special year for Temasek as we commemorate 50 years since our inception in 1974. We are marking this significant milestone at a time when the world is deeply divided.

Over the past three decades, we had enjoyed global peace and stability with free trade and global collaboration, albeit interspersed with events that included the SARS epidemic and COVID-19 pandemic. Unfortunately, we have now entered a new era of conflict and competition with ongoing wars in Ukraine and Gaza, and intensifying US-China tensions against the backdrop of a rise in polarisation, populism, nationalism, and protectionism in a number of countries.

We have seen the emergence of muscular industrial policies which nations have introduced to enhance domestic competitiveness, create jobs, and protect the livelihoods of their citizens. At the same time, the climate crisis continues to loom large, with the window for action rapidly narrowing each year. These have wide-ranging implications on companies around the world and exacerbate the uncertainty of the macro environment.

Interestingly, this harks back to the era in which we were founded, back in 1974 — when the world was divided similarly by geopolitical differences and faced similar challenges to those we are witnessing today. Understanding the journey that led us to where we are today is important to help prepare us for the future. It also gives renewed meaning to Temasek's ethos of doing things today with tomorrow in mind, so every generation prospers.

Temasek is a much bigger entity than it was in 1974. However, one thing remains constant, we must continue to build and innovate as we tap into new and emerging opportunities while scaling new heights in a changing world. Only with courage and conviction, can we help to build a better, more inclusive, and sustainable world for this and future generations.

Portfolio Performance

As at 31 March 2024, our net portfolio value was S$389 billion¹, up S$7 billion from the previous year, largely due to our returns in the US and India, offset by the underperformance of China’s capital markets.

Amidst the global economic uncertainties, we maintained a cautious investment stance, and invested S$26 billion and divested S$33 billion in the financial year ended 31 March 2024 with a net divestment of S$7 billion. This is compared to our net investment of S$4 billion in the last financial year.

Our 10-year and 20-year Total Shareholder Return (TSR) were 6% and 7% respectively. One-year TSR was 1.60%. TSR since inception in 1974 was 14%. On a mark to market basis, our net portfolio value as at 31 March 2024 would have been S$420 billion, including a value uplift of S$31 billion from our unlisted portfolio.

The resilience of our portfolio remains our core strength. We will continue to shape our portfolio in line with long-term structural trends, with the aim of achieving sustainable returns over the long term.

Navigating a Complex World

The global economy has been more robust than expected. Recession risks in key developed markets have largely subsided, as policymakers navigated an eventful 2023. While monetary policy remains tight globally, we are seeing inflation coming down from elevated levels. This has given central banks more confidence to potentially ease monetary policy, with some already beginning the process. Despite the better growth outlook, there are risks on the horizon. Geopolitical tensions are a key concern primarily centred on tense US-China relations, and the wars in Ukraine and Gaza. The elections in the US and other countries this year could add an additional layer of complexity to the risk-reward spectrum.

In the US, inflationary pressures have broadly eased, even as growth has remained firm. Expansionary supply factors, especially higher immigration flows, have made this possible by adding to the labour force and the economy’s overall growth capacity. However, the trajectory towards the Federal Reserve’s inflation target of 2% remains uncertain. An unclear inflation path, a resilient labour market, and continued growth suggest less need for the Federal Reserve to pre-emptively ease its restrictive monetary policy, potentially leaving policy rates higher for longer. If inflation turns out to be more persistent than expected, the odds of further hikes may increase which may result in headwinds to financial markets.

The Eurozone economy is recovering. Domestic consumption is supported by credit growth and a pickup in real wages as inflation slows. This has allowed the European Central Bank to normalise policy. In addition, the global manufacturing cycle has troughed, forming another growth tailwind. However, we are watchful for downside risks in the form of a less supportive fiscal impulse. In the long term, there remains scope for significant infrastructure build out across Europe because of the energy transition. This creates opportunities to invest in quality businesses that benefit from increased capital expenditure in green technologies.

China’s government has set a target of around 5% economic growth for 2024, which is the same as last year. The government maintains a pro-growth policy stance. This has aided China in recovering from a cyclical bottom in growth but structural challenges remain. Diversification plans by global multinational corporations and reduced foreign direct investment could lower the potential for productivity gains. China’s supply capacity remains highly competitive and efficient, but without a commensurate pickup in domestic demand, growth and inflation will continue to face downward pressure. At the same time, geopolitical tensions and threats of additional tariffs could weigh on export demand for Chinese goods.

Singapore’s open economy is expected to be supported by a healthy external growth backdrop and continued recovery in the global goods cycle. However, geopolitical events and conflicts pose risks. We remain watchful over any potential disruption to global trade and supply chains which could disproportionately impact Singapore.

Commemorating Our 50^th Anniversary

Turning 50 is an opportunity to reflect on our journey and prepare for the road ahead. To guide us to realise our Purpose — So Every Generation Prospers, we have refreshed the Temasek Charter, which is a living document that we review and update at different phases of Temasek’s journey. The refreshed Charter sets out our role as a global investor rooted in Singapore, to deliver sustainable returns over the long term. To move forward, we have developed our T2030 strategy to build a resilient and forward-looking portfolio, with sustainability at our core.

In June 2024, we announced T-Spring, a S$150 million gift to the community to advance capabilities and contribute to preparing Singapore’s workforce and organisations to embrace a different world. The gift — which supports skills development, scholarships, and fellowships — is Temasek’s tribute to Singapore’s past, present, and future generations on our 50^th anniversary. It reflects our intergenerational focus, underscores our roots, and acknowledges human capital as the driver of our journey and its role in Singapore’s success.

Extending Our Global Footprint

Temasek’s growth is a story of globalisation. In 1974, we had a portfolio of 35 Singapore companies and since then we have grown into a global investment house with 13 offices in 9 countries around the world.

In April this year, we held the official opening of our Paris office, reaffirming our commitment across the broader Europe, Middle East, and Africa (EMEA) region. Our exposure to the EMEA region has grown almost five times since 2011, reflecting the opportunities and innovation we see there. Our Paris office will complement our London and Brussels offices to strengthen Temasek’s global network.

Inaugural Sustainability Report

As we continue to adapt to a changing world, our commitment to placing sustainability at our core remains. This year, we launched our inaugural Sustainability Report. It brings together our disclosures and tracks our progress, by taking into consideration the disclosure requirements issued by the International Sustainability Standards Board. As a company, we uphold our commitment to carbon neutrality in our operations. We also remain committed to our strategy for net zero, nature positive, and inclusive growth.

I am also deeply appreciative to my colleagues on the Board for their tireless and generous contributions that enable us to navigate the challenges ahead. I wish to take this opportunity to welcome Tan Chong Meng and Geoffrey Wong who joined our Board on 1 April 2024 and 10 May 2024 respectively. Both are senior business leaders with extensive global experience in their respective fields. Chong Meng’s 40-year executive career has spanned both private and public service. His track record of driving commercial growth in diverse global markets will be invaluable in guiding the Temasek team to navigate the complex operating environment. Geoffrey has a long career in investment management, especially in the Asia Pacific and emerging markets. His deep investment experience in equities and other asset classes, as well as in the areas of investment management and governance, will help to strengthen our board and investment deliberations. We look forward to tapping on their guidance and counsel.

My message started with a sombre picture of our world. However, I am optimistic that we will weather the storm and emerge stronger. I say this with conviction as our history is proof that we have what it takes to overcome a challenging environment. Many of the issues that we are dealing with today were present in 1974, such as high inflation and interest rates, the global oil crisis, the Cold War, and a fragmented global economy. We surmounted those headwinds 50 years ago and thrived. We will rise above the challenges that have come back to revisit us and may stay with us well past the end of the decade.

Finally, I would like to thank our people who have been instrumental to Temasek’s journey. I am grateful to the boards, management, and staff of Temasek and our portfolio companies — past and present — for their contributions over the past 50 years. They have put us in good stead by always doing things with tomorrow in mind. We will strive to continue their good work and stay committed to doing well, doing right, and doing good, so that every generation prospers.

LIM BOON HENG

Chairman

July 2024