Singapore’s Temasek Is Bullish About China Market Due to Its Strong Support for Innovation
Du Qingqing
DATE:  Sep 25 2020
/ SOURCE:  Yicai
Singapore’s Temasek Is Bullish About China Market Due to Its Strong Support for Innovation Singapore’s Temasek Is Bullish About China Market Due to Its Strong Support for Innovation

(Yicai Global) Sept. 25 -- Temasek Holdings is actively positioning itself in the China market as the Singapore state investment company regards the country's strong support for innovation in its tech sector very encouraging, the head of Temasek China told Yicai Global.

China has achieved prominent breakthroughs over the last few years in the financial market and the institutional reform of the capital markets, Wu Yibing said. The country has pushed through supports targeting innovation in the life sciences, research and development of chips as well as other sectors, he added.

The launch of the Shanghai Stock Market's science and technology board, the Star Market, last July and the implementation of a new, quicker registration-based IPO system on the Shenzhen bourse's Nasdaq-style ChiNext Board last month are all market-oriented reforms of the securities market that Temasek finds quite encouraging, Wu said.

These reforms will definitely lead to the survival of the fittest, he added. Some companies will surge and do very well, and these are the ones that Temasek is interested in. Others will fall below the issuing price upon listing and might even be delisted.

Temasek now has more assets in China than in its home country. China accounted for 29 percent of Temasek's holdings as of March 31, according to its annual report published earlier this month. Singapore accounted for 24 percent, North America for 17 percent and Europe for 10 percent.

The firm has stakes in a number of Chinese internet-based giants, including Tencent Holdings, Alibaba Group Holding and Meituan Dianping. Two of its picks, fintech giant Ant Group and short video platform Kuaishou Technology, are planning mega initial public offerings later this year, and the stated-owned investment company is anticipating a huge windfall.

Temasek is an investor focusing on all stages of the life cycle of a company, and does not have strict restrictions on the timespan of a shareholding, Wu said. The firm is a holder of assets rather than just a fund, he added.

Temasek is dedicated to searching for future leaders within certain sectors, said Shen Ye, managing director of Temasek China. The company will invest in these firms from a very early stage, join hands with them and accompany them long-term.

Temasek does not want to be the harvester of unicorns, or privately-held startups worth more than USD1 billion, but is rather aiming for the super unicorns.

Other Sectors

China is also accelerating the reform of its healthcare system, which means that the country is quickly catching up with overseas nations in terms of medical infrastructure and research and development capabilities.

“For instance, the gap in the R&D of new drugs is getting much smaller than before,” Shen said. This has spurred the emergence of many innovative companies and the quality of their self-developed medicines is world class. There may be more than 20 healthcare and medical companies in China with valuations of over CNY100 billion (USD14.7 billion), he added.

The company is also backing some firms that are driven by consumption-related demand in response to the Chinese government’s new policies to boost domestic demand.

Temasek will still consider increasing its stakes in traditional companies like banks should their share prices fall to the equivalent or less than their intrinsic value, said Wu, adding that “this is exactly the reason why we still own a huge number of stakes in the banks.”

Editors: Tang Shihua, Kim Taylor

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Keywords:   Investment Strategy,Growth Sector,Government Policy,Temasek Holdings