Singapore's Temasek seeks investment in Europe, commodities

Thu Jul 5, 2012 5:27am EDT
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By Saeed Azhar

SINGAPORE (Reuters) - Singapore state investor Temasek Holdings TEM.UL, whose portfolio swelled to a record in the last fiscal year, is looking to acquire assets in Europe and plough more money into energy and commodities after doubling its exposure to the sector.

Sovereign wealth funds such as China Investment Corp CIC.UL are struggling to deliver decent shareholder returns at a time when the European debt crisis and an anemic U.S. economy are depressing capital markets from Brazil to Hong Kong. But beaten-down valuations have presented opportunities to investors such as Mexican tycoon Carlos Slim, who recently added European companies to his telecommunications empire.

Temasek's portfolio grew around 2.6 percent in the year ended March to S$198 billion ($156.37 billion), the company, whose assets are mainly in Asia, said in its latest report released on Thursday.

But net profit fell because of a tougher business environment for firms such as Singapore Airlines (SIAL.SI: Quote) and Neptune Orient Lines NEPS.SI, in which Temasek holds stakes. MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS declined 10.4 percent in the year ended March.

Temasek, headed by Ho Ching, the wife of Singapore's prime minister, said in the report that resources and energy accounted for 6 percent of its portfolio as of the end of March, up from 3 percent a year earlier.

In the 12 months ended March, Temasek invested S$2 billion in U.S. shale company FTS International and S$1.3 billion in fertilizer firm Mosaic Co (MOS.N: Quote). The firm also bought convertible shares of Chesapeake Energy (CHK.N: Quote), whose stock tumbled more than 30 percent in the last financial year.

"We will continue to look for opportunities in energy and resources," Chia Song Hwee, Temasek's head of strategy, told a media briefing.

Chia said there was significant contagion risk from Europe as the euro zone debt crisis heads towards its fourth year. But he said this would create opportunities to invest in companies that have exposure to Asia.   Continued...