For a behemoth like Singapore’s Temasek, China’s crackdown on its tech sector couldn’t come at a worse time. No one saw it coming and no one anticipated it to spread so wide from tech, education, to gaming industry.
For investors who are expecting big returns though, as new regulations are introduced in China, the risks are getting higher. If you look at the Temasek Investment 13F filings released on Monday (Aug 16), you could see that Temasek has been buying up Chinese shares of Didi Global, New Oriental, TAL Education, Baidu, Kanzhun, and Pinduodo.
Just to put in perspective on how badly Temasek has been hit by the clampdown; if you take a look at its shares in Didi Global, it has lost about 42% of the value, it lost about 35% in Pinduodo but where the dagger really goes down is in the online education sector. With the likes of New Oriental Education (-77.05%) and TAL Education (-79.39%), it has lost in excess of 70 plus per cent.
That shows you the magnitude of how Temasek has been hit, though, the company has previously said that it takes a longer term approach and sees beyond regulations.
In terms of its overall portfolio, China is a big investment. China accounts for 27% of its overall portfolio and this is a company that manages in excess of $200 billion dollars in assets under management.
In terms of the total value or total amount of investments in China, it added S$14 billion dollars in 2020, so it is a big amount and China has helped Temasek in terms of its returns. The company saw 25% returns in the last financial year which is the largest in more than 10 years, so whether or not it can continue at that pace, that is the big question.
Temasek has always invested in new companies, it has always helped the Chinese industries. It was one of the earliest investors in Alibaba for instance, so it has always been attracted in the growth of China and it is remained to be seen how much risk appetite there is for Temasek to hang on to these investments.