China maybe in distress at the moment — the economy is facing its slowest growth in more than two decades this year, investor sentiment is shaky, stocks are falling — but some investors such as Temasek Holdings remain optimistic about the country.
Temasek had a banner period in the year ended March 31, 2015, as it posted a nearly 20% return on investments, thanks to the good performance of its Singapore and Chinese portfolios, and a hefty net income.
Net income at Singapore’s state-owned investment company rose 33% to 14.5 billion Singapore dollars ($10.7 billion), Temasek said in a presentation to the media published on its website.
Asia was the recipient of nearly half of its fresh investments of 30 billion Singapore dollars made during the year, with North America and Europe getting the rest of the money.
Among the firms where it invested include AS Watson, Olam, Virtu Financial, as well as Prudential Plc and NN Group.
While it poured money into some firms, it also sold an estimated 1% stake in China Construction Bank, as well as its 10% holdings in Alibaba.
China is its second-biggest investment destination, accounting for 27% of total portfolio, next only to Singapore’s 28%.
Temasek remains confident about the Chinese economy’s long-term prospects.
“In China, we are seeing the rebalancing of the economy and we believe this will result in slower, but more sustainable, growth. Also the continued urbanization and consumption coupled with market reforms will continue to drive long‑term economic growth in China,” Temasek said.
Chinese stocks have fallen nearly 30% since its June 12 peak, and the government has launched a string of measures including a rate cut and the infusion of liquidity to stabilize the market. But these measures failed to reassure investors as prices continued to drop.
The Shanghai Composite Index opened down 7.5% Wednesday, dragging along the Hang Seng Index which was last seen down 4.6%, according to MarketWatch.
Photo credit: Sacha Fernandez via Flickr