Singapore’s Temasek to invest $30 billion in US over next five years, wary of China

Singapore’s state-owned investment firm Temasek plans to invest up to $30 billion in the U.S. economy over the next five years, with a focus on healthcare, financial services and technology.

Jane Atherton, head of Temasek’s North American operations, said the main reason for making the large investment is the strong opportunities in the US capital market, especially in the area of ​​artificial intelligence.

“It’s an incredibly deep and broad capital market in the U.S.,” Atherton told Reuters.

“The United States is really at the forefront of everything that’s happening from an AI perspective.”

The investment comes as the U.S. economy outperformed its global peers in the second quarter. The S&P 500 rose 14.5% in part because of advances in artificial intelligence.

Meanwhile, recent economic reports in China have shown weaker-than-expected growth, prompting the government to cut key interest rates to stimulate the economy.

Currently, 22% of Temasek’s $288 billion portfolio is invested in America, representing $63 billion and exceeding the 19% invested in China for the first time in a decade.

Temasek is interested in AI-related sectors in the US, such as data centers, semiconductors and battery storage.

The company recently said gains from investments in the US and India were offsetting weaker performance in China, where Temasek has adopted a cautious investment strategy amid ongoing trade tensions.

“Geopolitics always plays a role,” Atherton said, highlighting China’s underperformance compared to the United States over the past three years.

Temasek’s investment approach focuses on long-term themes such as digitalisation and sustainability as it aims to capitalise on growth trends in these areas.

Atherton also added that the future performance of U.S. stocks, especially in the technology sector, will depend largely on earnings growth.

“We saw some multiple expansion, but that was driven by higher growth and will theoretically pay off,” she said.

In addition to investing in the public market, Temasek is exploring opportunities in the private markets with a view to potentially selling assets to private equity firms.

It has significantly changed its investment strategy over the years, moving from public stocks to private markets. In March, unlisted assets made up 52% ​​of its portfolio, up significantly from 20% in 2004.

But Temasek executives warn that this is changing, with rising interest rates undermining the debt-based models that many private equity funds rely on, potentially leading to lower future returns.