Temasek’s new blueprint: More America, more AI, less China

(Edited and refined by Grace Chong and Candice Chan, with the assistance of AI translation.)

Temasek Holdings recently released its annual report for the financial year ended 31 March, with the net value of its investment portfolio reaching a record S$518 billion (US$401 billion). Its one-year total shareholder return, measured in Singapore dollars, also reached a double-digit 10.5%.

The portfolio exceeded the S$500 billion mark for the first time for two reasons: the strong performance of the Singapore market and Temasek’s full adoption of mark-to-market accounting, which incorporates the market value of unlisted assets.

Under the previous accounting method, the portfolio would have been valued at S$486 billion instead.

According to the Global SWF data platform, the latest valuation ranks Temasek among the world’s ten largest sovereign wealth funds. Temasek, however, does not regard itself as a sovereign wealth fund, describing itself instead as a “global investment company”.

Greater clarity, but greater volatility

The theme of this year’s annual report is “clarity” — reflected in Temasek’s new accounting methodology, clearer capital allocation targets and a more streamlined organisational structure following its restructuring.

Moving to mark-to-market accounting brings Temasek’s reporting more closely into line with global practice. The new approach also  “allows our investment folks to better see through their performance”, supports decision-making and improves “comparability with our group peers”.

Around a quarter of the portfolio is now valued at market prices. This includes unlisted portfolio companies such as Mapletree Investments and PSA International, as well as unlisted overseas assets.

The change makes Temasek’s portfolio valuation more transparent, but also more sensitive to market swings. Short-term performance is therefore likely to become more volatile.

Temasek’s one-year total shareholder return was 10.5%, lower than the 12.0% recorded under the book value method. Over longer investment horizons, however, the gap between the two approaches narrows.

Singapore remains the portfolio’s anchor

The record portfolio value was driven largely by the strong performance of the Singapore market. Although the conflict in the Middle East erupted in February, the Straits Times Index recovered steadily after a brief decline, ending March just 2% below its level before the conflict began.

Compared with March 2025, however, the benchmark index was still up nearly 28% over the year.

Singapore-based Temasek Portfolio Companies (these are companies in which Temasek typically holds a shareholding of at least 20%) account for 43% of Temasek’s portfolio. They include blue-chip stocks such as DBS, Singapore Airlines and ST Engineering, alongside unlisted businesses.

Temasek describes these companies as the portfolio’s core anchors and a key source of its resilience.

As a major shareholder, Temasek does more than provide capital — it also helps drive corporate transformation and growth. One example is unlisted ST Telemedia. In 2020, Temasek backed the expansion of the company’s global data centre platform and helped bring in strategic partners across Asia. Earlier this year, the business was sold to private equity firm KKR and Singtel for S$6.6 billion, allowing Temasek to realise the value of its investment.

Meanwhile, locally listed companies have continued to hit record highs, supported by the Equity Market Development Programme.

AI reshaping the investment landscape

Temasek has also continued to expand its investments in the Americas, particularly the US. Increased capital allocation and the strong performance of US capital markets have tripled its exposure to the region over the past decade.

Much of that growth has been driven by artificial intelligence (AI). For the first time, Temasek has set a formal target for AI investments. AI-related assets currently make up around 6% of the portfolio’s value, a figure expected to rise to as much as 15% by 2031.

Based on the current portfolio value of S$518 billion, this implies that Temasek’s exposure to AI-related investments will increase by tens of billions of Singapore dollars over the next five years.

Temasek’s investments

Over the past year, Temasek has invested in leading large language model developers, including Anthropic, OpenAI and xAI (which has since merged with SpaceX), while also investing in SpaceX itself, which is building the space and connectivity infrastructure underpinning AI.

Beyond AI models, Temasek’s AI investments span energy, data centres, semiconductors, cloud service providers, as well as application and software infrastructure. It has invested in CuspAI, which uses machine learning to accelerate research in materials science and chemistry, and PhysicsX, which applies AI-native simulation technology to engineering and manufacturing processes.

Temasek has also jointly invested with private equity firm Warburg Pincus in Park Place Technologies. The company provides third-party maintenance and support services for enterprise data centre hardware and is well positioned to benefit from the continued expansion of AI infrastructure.

Alongside building out its presence across the AI value chain, Temasek has increased its holdings in several semiconductor companies, including ASML, Broadcom and Nvidia, while initiating a new investment in semiconductor equipment manufacturer Lam Research.

Core-plus infrastructure has emerged as another key AI-related investment theme. At present, such assets account for around 1% of Temasek’s portfolio by value, but the firm aims to increase this proportion to about 5% by 2031. As demand for AI continues to grow, the investment value of infrastructure such as power generation, electricity grids and data centres has become increasingly evident.

Should the AI investment boom continue, the Americas could eventually overtake Singapore as Temasek’s largest investment exposure.

A more selective approach to China

In contrast to the strong performance of its investments in Singapore and the US, the Chinese market continues to face structural transition challenges. The latest figures show that China accounts for 17% of Temasek’s portfolio. Although this proportion has been declining since 2020, the absolute value of its investments in China remains higher than it was a decade ago.

Among Temasek’s latest list of major holdings, only Ping An Insurance and Tencent remain, as Alibaba and Meituan no longer appear on this year’s list. According to Temasek’s Form 13F filing, its holding in Alibaba has fallen from more than five million shares a year ago to just over 1.3 million shares.

Judging from Temasek’s investment announcements in recent years, its investment activity in China has been far quieter than it was a decade ago, suggesting a more selective approach to taking stakes in Chinese companies.

Its investments in China over the past year include Luckin Coffee, less-than-truckload (LTL) logistics network operator ANE, and 360-degree camera manufacturer Insta360.

After March this year, Temasek led an investment in TeraHop, the overseas subsidiary of Zhongji Innolight, the world’s largest optical transceiver provider and a key enabler of AI infrastructure.

Temasek nevertheless remains confident about China’s long-term growth prospects. It believes that innovation and entrepreneurship will continue to drive the transformation and upgrading of key industries, and intends to focus its future investments on biotechnology, robotics, AI hardware, the energy transition, and leading domestic consumer companies.

There is little doubt that China remains one of Temasek’s key investment markets. Whether that confidence can ultimately be translated into investment returns, however, remains to be seen.

People often ask: how much has Temasek earned this year? A more important question is where it intends to invest next. A portfolio value of S$500 billion is merely a numerical milestone, while valuing the portfolio on a mark-to-market basis is simply a new method of measurement. By contrast, Temasek’s emphasis on AI, infrastructure and other strategic themes provides a clearer picture of its investment blueprint for the next phase of growth. In the years ahead, the market will be watching not only when its portfolio reaches S$600 billion, but also whether that blueprint can be successfully realised.

This article was first published in Lianhe Zaobao as “5000亿元之后 淡马锡把钱投向哪里？”.

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