Temasek to invest US$30 billion in US amid caution on China investments

Singapore’s sovereign wealth fund, Temasek, has announced plans to invest US$30 billion (S$40.3 billion) in the United States over the next five years, as the firm adopts a cautious stance towards investments in China.

This strategic shift underscores the growing prominence of the American market in Temasek's global portfolio.

Jane Atherton, Temasek’s Head of North America, revealed the firm’s plans during an interview with Bloomberg on 29 July.

"The Americas is going to be and continue to be the largest recipient of capital," Ms Atherton stated.

In a significant milestone, Temasek's investments in North and South America have surpassed those in China for the first time in over a decade.

Investments in the Americas now constitute 22% (US$63 billion) of its portfolio, compared to 19% for China. Singapore remains the largest investment destination, accounting for 27% of Temasek’s holdings.

As of March, Temasek managed assets worth S$389 billion, a mere 1.6% rise from S$382 billion a year earlier.

The firm’s strategic pivot comes amid the ongoing geopolitical tensions between the US and China, particularly in the semiconductor sector, which is critical to the burgeoning fields of artificial intelligence and the digital economy.

The US has imposed export controls and tariffs to limit China’s access to advanced semiconductor technology, creating a challenging investment landscape.

Ms Atherton noted that Temasek is structuring its investments to navigate these geopolitical constraints, often taking passive public equity stakes in listed semiconductor companies.

In China, the firm avoids geopolitically sensitive sectors, focusing instead on large domestic companies, electric vehicle manufacturers, and biotech firms.

"We make sure we are not investing in businesses that are in the crosshairs of geopolitical tensions," Ms Atherton emphasized.

In contrast, Temasek is actively seeking opportunities in AI-related firms, semiconductor companies, and infrastructure plays such as data centres in the US.

The firm can leverage its real estate subsidiaries, Mapletree Investments and CapitaLand Group, to gain exposure to data centres or partner with private equity firms for such investments.

Over the past decade, Temasek’s assets in the US have grown fivefold, reflecting its increasing focus on the American market.

This update on Temasek's investment strategy follows a report earlier this month that it plans to invest up to US$10 billion (S$13.4 billion) in India over the next three years, targeting financial services and healthcare sectors.

According to Reuters, Mohit Bhandari, Temasek’s Managing Director for India, stated that India currently accounts for 7% of Temasek’s global investments, and the firm aims to increase this share as India’s economy continues to grow rapidly.