Temasek’s billions at stake: Investment in US tech giants sees mixed fortunes amid market volatility

Singapore’s state-owned investment firm, Temasek Holdings, significantly increased its exposure to US technology giants during the second quarter of 2024, investing billions of US dollars just before the sector experienced a notable downturn in July.

According to a Bloomberg report, Temasek’s holdings in 11 major tech companies surged by US$3.3 billion during the three months ending on 30 June, with the bulk of this increase—approximately US$3.2 billion—concentrated in six firms: Microsoft (MSFT), Apple (AAPL), Nvidia (NVDA), Alphabet (GOOGL), Meta Platforms (META), and Amazon.com (AMZN).

Temasek’s strategic decision to ramp up its investments in these tech behemoths was met with mixed results. By the end of July, concerns over the sustainability of artificial intelligence-driven gains and fears of a looming recession led to a significant drop in the share prices of several of these companies. Alphabet and Amazon, in particular, saw their stock values plummet by approximately 12 percent since the end of June, while Microsoft’s shares dipped by around 7 percent over the same period.

However, this aggressive buying spree was accompanied by a significant sell-off in other areas of Temasek’s portfolio. The firm completely exited its positions in a diverse array of companies spanning various industries, including technology, construction, healthcare, and industrial sectors.

In the technology sector, Temasek sold off its entire holdings in GitLab Inc. (GTLB), a leading software development platform, Snowflake Inc. (SNOW), a prominent data cloud company, and Datadog, Inc. (DDOG), a cloud monitoring service provider.

From the construction and materials industry, Temasek divested its shares in Martin Marietta Materials, Inc. (MLM), a major supplier of aggregates and heavy building materials, as well as Procore Technologies, Inc. (PCOR), which provides construction management software.

In the industrial sector, the firm sold off Cummins Inc. (CMI), a global leader in power solutions, and United Rentals, Inc. (URI), the world’s largest equipment rental company.

Additionally, Temasek liquidated its investments in several ETFs, including the Pacer US Small Cap Cash Cows 100 ETF (CALF), which focuses on small-cap stocks with strong free cash flows, the iShares Russell 2000 ETF (IWM), covering small-cap US companies, and the iShares MSCI Brazil ETF (EWZ), which provides exposure to Brazilian stocks.

This large-scale sell-off included the liquidation of 55,005 shares of GitLab, 61,648 shares of Snowflake, and over 3 million shares of Cue Health Inc. (HLTH), a healthcare technology company. The capital freed up from these divestments may have been reallocated to Temasek’s substantial investments in US tech giants, reflecting a strategic shift in its investment approach.

Despite the recent downturn, some of the tech shares held by Temasek have shown signs of recovery in the past week. However, it remains unclear how the firm has navigated the market since 30 June. Analysts speculate that Temasek could have realized gains by selling before the market decline, held steady through the dip, or even increased its holdings in a bid to capitalize on lower prices.

With a net portfolio value of S$389 billion as of 31 March 2024, Temasek’s investments in these tech giants represented about 1 percent of its total holdings. This multi-billion-dollar buying spree underscores Temasek’s ongoing commitment to expanding its investments in the US, which it recently highlighted as the primary destination for its capital. The firm has announced plans to invest US$30 billion in the US over the next five years.

Temasek’s aggressive push into the US tech sector could be seen as an attempt to replicate the success of Norway’s Government Pension Fund Global, the world’s largest sovereign wealth fund, which recorded a historic profit of 2.22 trillion kroner (approximately US$213 billion) in 2023. The Norwegian fund’s impressive 16.1 percent return on investment was largely driven by strong performances in the technology sector, despite a substantial loss in the previous year.

In its recent 13F filings, Temasek revealed significant increases in its holdings in companies such as Nvidia and Microsoft.

Nvidia, for example, saw its shares held by Temasek rise from 515,820 to 9,695,187, with the value of its investment growing from US$466 million to nearly US$1.2 billion. Similarly, Microsoft’s shares increased from 686,081 to over 2.1 million, with the value of the holdings jumping from US$289 million to US$945 million.

As Temasek continues to navigate the volatile landscape of the tech industry, its strategic investments will likely be closely watched by market analysts and investors alike, particularly in light of its ambitious plans to expand its footprint in the US market.