3 Top Stocks in Temasek’s Portfolio
The renowned Temasek Holdings, a massive commercial investment company wholly owned by the Singaporean government, announced in early July its annual results for the year ending 31 March 2019. Although its one-year total shareholder return (TSR) was a rather meager 1.5%, its annualized 10-year TSR of 9% and 20-year TSR of 7% were solid.
However, given its international reach in terms of the assets it holds, I was more interested in the top-performing listed shares in its portfolio. In particular, within the financials space, Temasek held stakes in three giant companies that have performed phenomenally over the past five years. And all of them are riding on unstoppable structural growth trends so let's take a look at them in more detail.
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First up is Indian financial services provider HDFC Bank Limited (NYSE: HDB). HDFC Bank is India's largest private sector bank by assets. The Indian banking system is renowned for poorly run state-owned banks dominating the scene.
However, HDFC has consistently outperformed by responsibly growing its user base in a country that still has millions of unbanked individuals, while also being disciplined in terms of which corporations and individuals it loans to.
For Temasek specifically, HDFC Bank delivered an impressive total shareholder return (TSR) of an annualised 26.3% over the past five years. HDFC's shares are listed on the National Stock Exchange of India but for foreign retail investors (who are locked out of India's stock markets) looking to access this fast-growing Indian bank, they can buy its American Depositary Receipts (ADRs) on the New York Stock Exchange under the ticker NYSE: HDB. It has a market capitalization of just over US$100 billion.
In joint second place was Visa Inc. (NYSE: V), the global payments processing giant. Visa has been a regular stalwart in the global duopoly in cashless payments, along with MasterCard (NYSE: MA), as it rides on the wave of the growth in cashless transactions.
The positive aspect of this structural shift to cashless transactions is that, on the whole, governments worldwide support this shift given digital transactions have an electronic trail that allows them to track flows of money. This helps in an array of law enforcement issues that we don't commonly think about, from battling money laundering to ensuring tax compliance.
For Temasek specifically, Visa has been a worthwhile holding having delivered an impressive TSR of an annualized 24.6% over the past five years. The stock is traded on the New York Stock Exchange under the ticker NYSE: V. It has a market capitalization of around US$355 billion.
3.) Ping An Insurance
Sharing second spot with Visa was a name most of us in Hong Kong will be familiar with; Chinese insurance and technology solutions giant Ping An Insurance Group Co (SEHK: 2318). Ping An is one of the largest financial conglomerates in China with interests in insurance, banking, and financial services.
More recently, it has seen solid growth on the back of its more unorthodox offerings in the tech space – namely start-ups which are becoming big in their own right. These include Lufax, an online financial marketplace, Ping An Good Doctor, a one-stop healthcare ecosystem platform, and OneConnect, a leading fintech software-as-a-service (SaaS) provider. All these have contributed massively to the firm's growth while it also continues to benefit from the growing demand for insurance products in the world's second-largest economy.
For Temasek specifically, Ping An matched Visa's return over five years – delivering TSR of an annualized 24.6%. Ping An has a dual listing of H-Shares and A-Shares, trading in both Hong Kong and Shanghai respectively, with the more accessible of these being in the former under SEHK: 2318. It has a market capitalization of around US$220 billion.
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