Temasek Holdings SWOT & PESTLE Analysis

Strength

1. Singov owned investment company evidently enjoys strong government support: Founded in 1974, while being incorporated under the Singapore Companies Act, Temasek Holdings is the 100% state-owned sovereign wealth fund company. The Singapore Ministry of Finance, being the only shareholder, Temasek Holdings enjoys government support and credibility as compared to other Singapore based investment firms. The government of Singapore's Auditor-General audits the company's financial statements, thus allowing it to achieve the level of transparency required in public. This transparency level is further consolidated by its practice of making its finances public, although as a private firm, it is under no obligation to do so. Financed by the federal reserves, Temasek Holdings had acquired a net portfolio value of S$ 306 billion as of March 31, 2020, which was up by $120 billion over the last decade. Temasek Holdings, riding high on robust government support, has thus been able to be the backbone of Singapore economy and contributed massively towards spurring economic growth. The government support is all the more evident because Singapore's financial strength is linked to Temasek Holdings, one of the three government entities (GIC and MAS).

2. Triple-A ratings by Moody's and S&P: In the eyes of rating agencies like Moody's and S&P, Temasek Holdings' credit profile has a stable outlook known by the triple-A ratings. This mirrors how the institution's credit profile has strong fundamentals with a high-quality investment portfolio. They are also known to provide a steady and recurring dividend income. Temasek Holdings' reputation for being a 100% Singapore government-owned company also benefits the credit ratings. Having a good liquidity profile because they have been in a net cash position since the fiscal year 2008, has also immensely helped it get the AAA ratings. The rating agencies further expect the institution to maintain its cash and liquid securities reserves, thus enhancing its credit profile. Their dividend income has increased from S$ 7.8 billion in 2016 to S$ 11.9 billion in 2020, with liquid assets amounting to S$ 112.4 billion and liquidity balance remaining stable at S$ 47.1 billion. A total debt hovering at 5% of net portfolio value and interest expense pegged at 3% of the dividend income, furnishes clear testimony of the financial strength of Temasek Holdings.

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Weakness

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Opportunity

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Threats

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Political

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Economic

1. China’s accelerating GDP growth rate acing all Asian countries: At a time when the aftermath of the Covid-19 pandemic battered many economies, China registered an expanding GDP at 4.9% in the third quarter of 2020. This was up by 1.7% points as compared to the preceding quarter. According to the IMF, China's economy is forecasted to grow by 1.9% by 2020, making it the only economy to expand in a year when the entire world was hit by pandemic. Statista reports have forecasted a real GDP growth to 8.24% in 2021, which will recede to 5.49% by 2025. With the GDP being an important indicator of the country's economic strength, China stood as one of the leading economies in terms of that. It was second only to the USA. This is an excellent sign for Temasek Holdings, which has 23% of its investments in China alone. China is heavily reliant on manufacturing and industrial production, and the recovery was also driven by the growth of industrial output (5.8%). The recovery of exports also helped the economy to bounce back on track.

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Social

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Technological

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Legal

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Environmental

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