SINGAPORE Reuters -- Singapore's Temasek Holdings said market valuations had not yet priced in a global economic recession and that the state investor was waiting for further declines before stepping up investments.
The current valuations are not reflecting the risk of the next 12 to 18 months, according to the chief investment officer, Rohit Sipahimalani.
Sipahimalani told a session at the Milken Institute Asia Summit in Singapore that as these valuations are correct, we will step up our pace of investment. He said that Temasek is committed to four major investment trends, including digitization, longer lifespans, sustainable living and the future of consumption.
He said that the trends are still valid. We will continue investing alongside them with a few nuances over the long term. Big increases in interest rates by inflation-fighting central banks have raised concerns about a recession or economic slowdown, as stock markets have fallen sharply this year.
Sipahimalani said the markets had not predicted a major decline in earnings and were instead focusing on growth in 2023. Even in a mild recession, you will probably see a double-digit decline in earnings, he said, adding that earnings could decline by as much as 15 percent. Temasek, which owns some of the biggest Asian companies, such as Standard Chartered, China Construction Bank and DBS Group, is anchored in Asia.
The investment firm has a 63% exposure to the region as measured by the underlying assets of its portfolio companies, most of which are in Singapore and China. Sipahimalani said that the UK hasn't been a significant investment destination for us. We've seen a lot of these things happen in markets like the US and China, whether it's about digitization or longer lifespans, health tech, biotech or sustainable living. Sipahimalani said that Temasek remains bullish on China in the long term based on its investment themes.