Welcome to this week’s edition of top stock market highlights.
Temasek Holdings
Temasek reported a tough year for its latest report for the fiscal year ending 31 March 2023 (FY2023).
The investment firm incurred a net loss of S$7.3 billion for FY2023, reversing the net profit of S$11 billion a year ago.
It was also the first time since 2016 that Temasek had announced a net loss.
In its annual review, the investment firm saw its portfolio value fall to S$382 billion, down from the record high of S$403 billion in FY2022.
However, this portfolio level was still marginally higher than FY2021’s S$381 billion.
Temasek’s total shareholder return came in at minus 5.07% for FY2023 compared with positive 5.81% a year ago.
As part of its T2030 strategy, Temasek seeks to deliver returns that exceed its cost of capital of around 9% currently.
CEO Dilhan Pillay reiterated that the portfolio’s focus will be to withstand external shocks and perform through both up and down economic cycles.
However, the firm faces challenges such as high inflation and surging interest rates that may lead to potentially lower inflation-adjusted returns.
The T2030 strategy is a 10-year roadmap developed in 2019 as an evolution of the previous 2020 strategy.
The resilient component of Temasek’s portfolio will take up around 60% to 70% and include core portfolio companies and its asset management business.
The remaining 30% to 40% will be the dynamic component with direct investments in various focus sectors along with early-stage unlisted businesses.
CIO Rohit Sipahimalani believes that over the long term, meeting the objective of achieving a return exceeding 9% should not be difficult.
This is because its overall portfolio has delivered double-digit returns in the past 20 years.
NASDAQ 100 Index
The NASDAQ 100 Index is facing an unusual situation.
The index, which comprises 100 of the largest non-financial companies on the exchange, is widely seen as a proxy for growth stocks and has surged by 37% year-to-date.
The exchange announced a special rebalancing to avoid over-concentration.
Stocks that make up more than 4.5% of the index cannot make up more than 48% of the index, as part of the index’s construction methodology.
As of July 10, the five largest stocks within the index are approaching this limit.
Together, Microsoft (NASDAQ: MSFT), Apple (NASDAQ: AAPL), Nvidia (NASDAQ: NVDA), Amazon (NASDAQ: AMZN) and Tesla (NASDAQ: TSLA) made up close to 43.1% of the index.
Already, the top three stocks in this list take up more than 30% of the index while the top 10 accounts for close to 60%.
The special rebalance will redistribute the weights without removing or adding any components and will be effective on 24 July.
Mapletree Investments Pte Ltd
Mapletree Investments Pte Ltd, or MIPL, announced the acquisition of its first logistics property in Kyushu, Japan.
The Grade A logistics facility, which has a total floor area of around 110,744 square metres, will be completed by the end of this month.
Once completed, it will be added to the investment firm’s Japan assets under management (AUM), which stood at S$3.9 billion as of 31 March 2023.
MIPL’s Japan portfolio also comprises office, retail and lodging properties.
The investment firm is the sponsor for three Singapore-listed REITs, namely Mapletree Logistics Trust (SGX: M44U), Mapletree Industrial Trust (SGX: ME8U), and Mapletree Pan Asia Commercial Trust (SGX: N2IU).
The addition of this asset means that MIPL could eventually inject it into one of its listed REITs, and further acquisitions in Japan could also bolster its divestment pipeline.
Thomson Medical Group (SGX: A50)
Thomson Medical Group, or TMG, will acquire Vietnam’s FV Hospital for up to S$517.1 million.
The healthcare group will acquire a 100% stake in Far East Medical Vietnam, which operates a range of healthcare facilities in the country including FV Hospital and a chain of primary and specialist clinics.
FV Hospital was founded in 2003 and is located in Ho Chi Minh City providing a full set of healthcare services and acts as a one-stop healthcare provider for both Vietnamese and Cambodian patients.
The hospital reported a net profit of around S$15.5 million for 2022.
TMG says that the purchase is in line with its goal of growing its pan-Asia footprint and will be funded via internal resources and debt drawn down from financial institutions and debt markets.
Vietnam’s healthcare expenditure grew at 9.2% per annum from 2017 to 2022, providing ample opportunity for FV Hospital to continue growing its top and bottom lines.
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Disclosure: Royston Yang owns shares of Apple and Mapletree Industrial Trust.