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US remains largest foreign destination for Temasek's

capital

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Temasek continues to believe in China's longer-term

prospects

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Increased focus on investing in areas like infrastructure,

AI

By Yantoultra Ngui

SINGAPORE, July 9 (Reuters) - Singapore's state investor

Temasek reported on Wednesday an 11.6% year-on-year jump in its

net portfolio value to a record S$434 billion ($340 billion),

and said risks around U.S. immigration, tariff and fiscal

tightening policies had likely peaked.

U.S. President Donald Trump opened a new phase on Monday in

his trade war, telling partners from powerhouse suppliers such

as Japan and South Korea to minor players including Malaysia

that they face higher tariffs from August 1.

"We still have to be watchful of the tariff developments

over the next few weeks and months," Lim Ming Pey, Temasek's

joint head of corporate strategy, told Reuters in a briefing.

Temasek's chief investment officer Rohit Sipahimalani said

tariffs were not expected to return to the levels seen on

Trump's "Liberation Day" on April 2, while some earlier risks

such as fiscal tightening that would slow U.S. growth had eased

with the passage of his sweeping tax-cut and spending bill.

"Generally speaking, the slowdown in growth that we're

seeing right now because of tariff uncertainty, we should see a

recovery in growth towards the end of the year, particularly as

the Fed cuts rates and more deregulation happens, and there's

more clarity around tariffs," Sipahimalani said. "The challenge

in the U.S. is valuations."

Nevertheless, Lim said Temasek saw "bright spots, such as

the U.S.'s world-class capabilities in AI, which will have a

transformative impact across all sectors."

The U.S. continues to be the largest destination for

Temasek's capital, the company said. The Americas made up 24% of

its portfolio at the end of its financial year on March 31,

versus 22% on the same date a year ago.

CHINA

The rise in Temasek's net portfolio value was the second

consecutive annual increase, and largely driven by the strong

performance of its listed Singapore-based companies and direct

investments in China, India and the United States.

Temasek continues to believe in the longer-term prospects of

China, Lim said. China is Temasek's third largest market in

terms of underlying exposure at 18% as at end-March, after

Singapore at 27% and the Americas at 24%.

"We see opportunities in the green economy and life sciences

innovation, and also in leading domestic brands which continue

to scale and grow in a resilient manner," she added.

Moving forward, Temasek said it was increasing focus on

investing in companies with stable cash flows and earnings, as

well as access to large domestic markets that are better

shielded from tariffs and geopolitical risks. It is also

focusing on infrastructure and artificial intelligence.

"We do not only make investments ourselves, we also invest

in AI-related funds," Chia Song Hwee, Temasek's deputy CEO,

said. Temasek's investments in the AI sector include companies

such as Nvidia ( NVDA ), Databricks and Veeam.

It recently joined a consortium backed by Microsoft ( MSFT )

, BlackRock ( BLK ) and tech investment company MGX to

invest and expand AI infrastructure, according to BlackRock's ( BLK )

investor day presentation slides in June.

($1 = 1.2766 Singapore dollars)