July 10, 2018 / 7:38 AM / 9 months ago

UPDATE 2-Singapore's Temasek sees deals slowing as trade tensions bite

* Reports net portfolio value at record high S$308 bln

* Gives cautious outlook, cites trade war

* Temasek reshaping itself as big investor in start-ups (Recasts story, adds comments)

By Anshuman Daga and Jack Kim

SINGAPORE, July 10 (Reuters) - Singapore state investor Temasek Holdings cautioned it was looking to temper its pace of investments this year as trade tensions between world's top two economies ratchet up, after reporting a record high annual portfolio value.

The cautious outlook underlines the challenges that state investment firms like Temasek face as rising protectionist policies and anti-globalization sentiments put their investment and risk management capabilities to test. China Investment Corp, earlier this week, struck a similar cautious note.

"We expect global growth to moderate and see the probability of risks increasing," Temasek's managing director of investment, Sulian Tay, said at a news conference on Tuesday. "These include geopolitical and trade tensions as well as monetary and financial stresses in important economies."

Escalating trade tensions between the United States and China have shaken markets over the past month. Washington implemented tariffs of 25 percent on $34 billion of Chinese imports just last week, with Beijing swiftly retaliating in kind.

Recent data suggests "trade wars and overheated valuations are turning most sovereign wealth funds cautious", said Javier Capape, Sovereign Wealth Lab director at IE Business School.

Temasek, the top investor in about a third of companies in Singapore's Straits Times index, said it was looking to temper its investment pace in the year ahead but was open to investment opportunities, including counter-cyclical ones.

"We do have a more cautious outlook right now compared to what we had in the past," said Rohit Sipahimalani, Temasek's joint head of portfolio strategy and risk group.


Headed by Ho Ching, wife of Singapore's prime minister, Temasek has reshaped itself as a global investor, ploughing billions of dollars into tech startups and emerging markets, while retaining stakes in firms such as DBS Group and Chinese banks including China Construction Bank.

For the year ended March 2018, Temasek's portfolio value hit S$308 billion ($227 billion), an all-time high and 12 percent more than a year ago. It saw S$29 billion in new investments last year, versus S$16 billion in divestments.

In recent years, Temasek has raised its exposure to start-ups. Last month, Temasek and GIC, Singapore's bigger state fund, featured among main investors in a record-setting $14 billion fundraising by China's Ant Financial Services Group.

The United States accounted for the biggest share of its new investments in the year just ended, with China coming in second.

Among its latest U.S. deals is a purchase of a portfolio of student accommodation properties in North America worth $1.6 billion. It also led a $502 million investment in Magic Leap Inc, a U.S. startup developing augmented reality tech products.

Temasek said it was comfortable with its Chinese bank holdings. ($1 = 1.3542 Singapore dollars) (Reporting by Anshuman Daga and Jack Kim; Editing by Himani Sarkar)

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