Singapore state investor Temasek Holdings reported a net portfolio value of S$518 billion ($401 billion) for the financial year ended March 31, 2026 - a second consecutive annual record - driven by strong performance from its Singapore holdings and S$31 billion in divestments.
The firm posted a 10.5% total shareholder return for the year. The Straits Times Index climbed more than 23% from April 2025 to March 2026, buoyed by the Equity Market Development Programme the country's monetary authority launched to unlock greater value in local equities. Key Singapore positions in Temasek's portfolio include DBS Bank, Singapore Airlines, and Singtel.
Returns would have been higher without two headwinds. The Iran war that broke out on February 28 shaved roughly 2% off portfolio value, and a stronger Singapore dollar cut the one-year total shareholder return by about 2 percentage points, Temasek said at a media briefing.
China exposure shrinks as a share, but grows in absolute terms
Five-year total shareholder returns came in at 4.6%, weighed down by headwinds in China's markets from 2021 to 2024. Temasek has reduced its portfolio exposure to China from 24% in 2016 to 17% in 2026. Still, the firm said it "remains committed" to the world's second-largest economy. In absolute terms, its China exposure increased by S$10 billion over the past year. On a 10-year basis, total shareholder returns stood at 7.1% in Singapore dollar terms.
Among the year's largest divestments was a reported S$8.18 billion stake sale in Schneider Electric India in June 2025.
Three areas of focus: AI, private credit, and infrastructure
Temasek outlined three priority areas for future investment: artificial intelligence, private credit, and what it calls "core-plus" infrastructure - a category spanning renewable and nuclear energy, energy storage, and decarbonization technologies. The firm plans to increase core-plus infrastructure exposure to 5% of the portfolio within five years.
On AI, Temasek intends to boost related exposure from the current 6% to 15% by 2031. Current investments include Anthropic and OpenAI in the U.S., and the firm said it will deploy capital across the value chain, including cloud service providers, foundation models, and AI applications. "[We] see the rapid advancement of AI as a pivotal phase that will create vast new opportunities," Temasek said. For finance professionals tracking how institutional capital is responding to AI's expansion across sectors, AI for Finance offers relevant context on these shifts.
The private credit target is equally ambitious. Temasek aims to more than double its allocation from 2% to 5% by 2031, focusing on senior secured structures that provide downside protection. The strategy emphasizes corporate lending, asset-backed financing, and real estate credit - areas designed to strengthen diversification across the portfolio.
Why this matters for finance professionals
Temasek's allocation shift - pulling back on China as a percentage while scaling AI, private credit, and infrastructure - signals where a S$518 billion state fund sees durable returns over the next five to ten years. The 15% AI target by 2031, up from 6%, represents a deliberate bet on the full value chain, not just high-profile model developers. For investment professionals, the mix of senior secured private credit and core-plus infrastructure also points to an emphasis on downside protection amid geopolitical uncertainty - a framework worth watching as other sovereign funds and large allocators adjust their own portfolios.
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