By Yantoultra Ngui

SINGAPORE, July 9 (Reuters) - Singapore state investor

Temasek said on Tuesday its net portfolio value had swung back

to growth with a 1.8% gain, adding that profits from investments

in the United States and India helped cushion the impact of

underperformance in China.

Significantly, Temasek's exposure to the Americas

surpassed China for the first time in a decade, accounting for

22% of its portfolio versus China's 19% during the year ended

March.

Temasek said it is taking a cautious approach to China and

would continue to monitor the country's government policies this

year. Aside from Singapore - its biggest market accounting for

27% of its portfolio, the U.S. would continue to be a leading

destination for its capital, followed by India and Europe.

The firm added it plans to step up investments in Japan and

Southeast Asia. Temasek is also considering building its

presence in the Middle East, Deputy CEO Chia Song Hwee told

Reuters in an interview.

"The economies (in the Middle East) are going through

transformation and opening up and also the policy directions are

more investor friendly as well as market-driven," he said.

"So we are clearly seeing the change and we are beginning to

spend time looking at opportunities and evaluating."

The rise in the value of Temasek's portfolio to S$389

billion ($288.5 billion) compares with last year's 5.2% drop

which had marked the first decline since 2020 amid global

economic uncertainties and a higher interest rate environment.

Chia said the firm would continue to "reshape" its

portfolio. That includes in China where geopolitical tensions

remain a concern and focusing on companies that are centred on

the domestic market and rely less on exports, he said.

"Portfolio never stays static. And what we try to do is to

reshape our portfolio time and time again to be future-proof,

future-ready while making sure that we can earn a long-term

sustainable return," he added.

"Our portfolio is still very large in China, even at 19% it

is still a large portfolio for us."

Chinese companies that Temasek has invested in include

Alibaba Group ( BABA ) and Tencent Holdings ( TCTZF ), owning

stakes of less than 1% in both. It also invested in Chinese

electric vehicle company BYD during the latest

financial year. The size of that holding was not disclosed.

In the United States, its investments include its stake of

around 3% in asset manager BlackRock ( BLK ) and holdings of

less than 1% in credit card payment companies Visa and

Mastercard ( MA ).

Regardless of the outcome of the U.S. election in November,

the world's largest economy will continue to be an "interesting

market" for Temasek due to innovation and opportunities in the

private credit and technology sectors, Chief Financial Officer

Png Chin Yee said in a separate interview.

Temasek will continue to seek investment opportunities in

artificial intelligence and green transition, its head of

financial services Connie Chan also said.

In May, Temasek partnered with Canada's Brookfield

to invest in Neoen, a deal that valued the French

renewable power producer at around 6.1 billion euros ($6.6

billion).

Other global investors have also posted gains driven by a

better-than-expected U.S. economy and growing expectations of

lower interest rates.

This month, Japan's Government Pension Investment Fund

posted an investment gain of $133.3 billion for the

January-March quarter, while Saudi Arabia's sovereign wealth

fund PIF reported it swung to a profit of $36.8 billion in 2023.

($1 = 1.3484 Singapore dollars)

($1 = 0.9228 euros)