Temasek faces structural challenges

TEMASEK Holdings' struggle to meet its own targets raises the risk that it may have to cut its growth expectations or take on more risk to try and catch up.

On July 7, the Singapore investment company reported a minus 9 per cent one-year total shareholder return for the year ended March 2016, its first negative return since fiscal 2009. That was actually an overperformance compared to key equity benchmarks, but Temasek is a long-term investor and it is the long-term implication that is more concerning.

With the latest report, Temasek has missed its own one-year risk-adjusted hurdle rate of 8 per cent in four out of the past six years. Annualised, Temasek's return has been only about 4 per cent per year over the past six fiscal years.