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Temasek prepared to invest more in Western banks
SINGAPORE (Reuters) - Singapore sovereign wealth fund Temasek Holdings, which has pumped billions of dollars into ailing lenders such as Merrill Lynch & Co Inc, said it may invest more in Western banks if the opportunity arose.
The fund also said its assets rose 13 percent in the year to March, despite a sharp drop in equity markets that started in the fourth quarter of last year.
Chairman S Dhanabalan told Singapore entrepreneurs on Thursday that the fund had taken a 5-7 year view on its near-$6 billion investment in Merrill Lynch and described the U.S. broker as an institution with a good management and business.
"If there is an opportunity to invest, we will look at it," Dhanabalan said in response to a Reuters question on whether the firm was prepared to put more money into Western lenders.
Sovereign funds from Asia and the Middle East have become more influential in financial markets after investing in Wall Street and European banks hit by losses from U.S. mortgages, though bank stocks have slid this year amid debt writedowns.
"Growing with our blue chip companies and our direct investment activities, Temasek now owns a net portfolio of about S$185 billion ($131 billion) at market value as at end-March," Dhanabalan said.
The firm's assets were worth S$164 billion at end-March 2007.
Dhanabalan did not explain how Temasek grew its portfolio amid turmoil in financial markets.
For instance, while it correctly called the top of the Chinese market and pared stakes in China Construction Bank and Bank of China last year, the share price of key holdings such as Barclays and Singapore's DBS Group fell sharply in the 12 months to end-March.
"It was a pretty difficult period in global equity markets for sure. I suppose they were pretty clever," said David Cohen, director of forecasting at Action Economics in Singapore.
"Even the Singapore dollar was strong during the period so it wasn't as if they got a big boost from the currency."
Temasek will release its 2007-08 annual report on Tuesday.
The Singapore government has injected a little under S$30 billion in assets and cash into Temasek since it was set up in 1974, Dhanabalan said.
"Our total shareholder return measuring changes in shareholder funds, including dividends paid and excluding new capital, is a healthy 17 percent compounded annually since inception," he noted.
Temasek, the smaller of Singapore's two wealth funds behind Government of Singapore Investment Corp (GIC), has sought investments beyond its core markets of Asia excluding Japan to boost returns and diversify its portfolio.
In his address, Dhanabalan said Singapore and Asia account for nearly 75 percent of Temasek's investments, down from 78 percent reported a year earlier.
Dhanabalan said Temasek aims to have in the long run about one third of its assets in Singapore, another third in emerging markets and the rest in developed markets.
It is recruiting staff for new offices in Mexico and Brazil that will be set up this year
Temasek is also looking at Africa and the Middle East, and has asked a small number of staff to spend part of their time looking at potential investments there, a source familiar with the firm said.
Dhanabalan, who has been chairman of Temasek since September 1996, is a former Cabinet minister who once helmed the city-state's trade & industry and national development ministries.
(Editing by Neil Chatterjee and Ian Geoghegan)
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