Singapore-based Temasek Holdings has reported a 24.5 percent increase in its portfolio value for the fiscal year ending in March 2021. Ranked as one of the biggest investors in the world, Temasek has 64 percent exposure in Asia, with most of its investments made in companies from Singapore and China.
The portfolio value grew from 306 billion Singapore dollars (approx. 225 billion US dollars) in March 2020 to 381 billion Singapore dollars (approx. 280 billion US dollars) a year later. Temasek’s portfolio value had declined by 2.2 percent during the 2019-2020 period.
The company’s China exposure includes investments in firms like Alibaba, Didi, Tencent, and so on. Some of the Chinese tech firms are currently targets of Beijing’s regulatory crackdowns. For instance, Didi, China’s biggest ride-sharing app, was recently instructed by officials to suspend new registrations and remove its app from the country’s app stores. However, Temasek is apparently not too concerned about Beijing’s crackdown.
“[Regulation is] one of many risks in any country that we invest in… It’s not just in China that we are mindful of regulation and changing regulation. I don’t believe it changes our stance on China in any way. We continue to invest. We continue to consider regulation as it comes forward,” said Mukul Chawla, Temasek’s joint head for telecom, media, and technology.
According to Nagi Hamiyeh, joint head of Temasek’s investment group, the company’s investments in China rose by 14 billion Singapore dollars (approx. 10.32 billion US dollars) last year. While Temasek is “monitoring” tensions between Beijing and Washington, it will “continue investing” in both nations.
Hamiyeh added that their Chinese investments could weather any fallout from China-U.S. tensions because they are largely “domestic in nature,” and as such “do not rely on import or export.”
CCP cracks down on companies
Didi is one of the largest ride-hailing apps in the world. Based in Beijing, it has operations in 14 nations and has 493 million annual active users, three-quarters of which are from the Chinese mainland. On June 20 this year, Didi filed to go public at the New York Stock Exchange (NYSE), hoping to raise 10 billion dollars. On June 30, the firm went public and raised 4.4 billion dollars, with a company valuation of around 70 billion dollars.
A few days later on July 2, Cyberspace Administration of China (CAC), the country’s internet regulator, said in a Weibo post that it was conducting a cybersecurity review of Didi to “prevent national data security risks and maintain national security,” citing its Cybersecurity Law and National Security Law.
Didi was prohibited from adding new users “to prevent the expansion of risk.” On July 4, CAC ordered Didi to remove its apps from app stores. Then, on July 16, CAC announced that it would be conducting an on-site cybersecurity investigation of Didi.
Didi’s opening price at the NYSE on June 30 was $16.82 per share, a 20 percent increase from the initial public offering (IPO) price of $14. However, Didi’s subsequent suppression by Chinese authorities has dampened investor interest. The firm is currently trading at $12.36 per share at the NYSE, which is 26.51 percent lower than the peak reached on June 30.
In an interview with The Epoch Times, China expert Gordon Chang stated that China’s crackdown on companies like Didi is an indication that the CCP “doesn’t really care about money” as other people think. Instead, what the CCP really cares about is “absolute control, not only over state enterprises but also dominant private enterprises.”
He called Beijing’s decision to crack down on Didi right after its NYSE IPO theft. “This is thievery because they could have done this before the IPO… Those who bought into Didi Global … suffered losses because of what China did,” Chang stated.
There have been rumors that Didi is transferring sensitive data to the United States. Though Didi houses its data on servers located within China, CAC officials are apparently worried that the equipment for these servers, which are brought from abroad, could be vulnerable to breaches.
Several weeks before the Didi IPO was announced, CAC had asked the company to delay the event. However, Didi went ahead with the IPO since there was no outright order. According to Li Hengqing, a China expert based in Washington, the CCP is “demanding all the private businesses to listen to what the Party says, or they would have no future,” reported The Epoch Times.
Chen Yonglin, a defected former Chinese diplomat, notes that companies listed in the United States are a key channel for money flowing out of China. This capital transfer is a “sore point” for President Xi Jinping.
“A large company itself often worries Xi Jinping… When a company grows, like Alibaba, Ant Group, it poses a threat, or potential threat to him. So the regulation will be stricter… It is a signal that companies, especially big tech companies, are impossible to list in the foreign stock market,” Chen said to The Epoch Times.
Protecting U.S. investors
In addition to Didi, CAC has also begun reviews of two Chinese companies listed on American stock exchanges. One of the reviews involves subsidiaries of Truck Alliance Co., also known as Manbang, which raised 1.6 billion dollars in an IPO last month.
The second company, Kanzhun Ltd, also known as Boss Zhipin, is an online recruitment platform that raised over 900 million dollars through the Nasdaq Stock Market last month. According to Chris Iacovella, CEO of American Securities Association, Wall Street is indifferent to the risk posed by the communist regime to the United States.
“The CCP has and will continue to exert its control over every Chinese company, and Wall Street doesn’t care about the danger this risk poses to American investors… It is also hard to understand how CCP-controlled companies continue to trade in our markets… The post IPO timing the CCP used to exert control over Didi should be especially concerning to regulators,” Iacovella said.
Republican Senator Marco Rubio also does not want Chinese companies to be listed on American stock exchanges. He previously attempted to block Didi’s NYSE IPO. In an interview with The Epoch Times, the senator said that the decision to allow “a totally unaccountable” Chinese company like Didi to list was “disastrous” from the start. He believes that Beijing’s decision to crack down on Didi, which came with little warning, was an “intentionally opaque” decision.
“[It provides] yet another reason we cannot allow these companies, which have no meaningful independence from the political whims of the Chinese government and Communist Party, to list on our exchanges and take advantage of American investors,” Rubio said.
In the first half of 2021, Chinese companies, including those from Hong Kong, raised 12.4 billion dollars from American capital markets. Wall Street’s top investment banks are estimated to have earned over 450 million dollars by assisting with the IPOs of these companies.