Temasek optimistic about China

Temasek Holdings Pte Ltd remains optimistic about investing in China because the country remains one of the most promising opportunities in the world, the company said at a news conference on Tuesday.

Apart from involvement in China's banking sector, the Singapore state investor said it will also increase investment in China's State-owned enterprises and other projects related to the country's urbanization process.

According to Temasek's annual report for the fiscal year 2013 released last week, China remains the most important foreign investment destination for the company, accounting for 23 percent of its total investment after the Singapore market, where the proportion is 30 percent.

"We are generally satisfied with investment returns from the Chinese market," said Ding Wei, head of operations at Temasek China.

Temasek holds stakes of almost $18 billion in China Construction Bank Corp, Industrial and Commercial Bank of China Ltd and Bank of China Ltd, making it the biggest foreign investor in Chinese banks.

"It's inevitable that one would invest in the Chinese banking sector during the process of investing in China in the future," Ding said.

Temasek regards the finance sector, especially the banking industry, as the epitome of the real economy, representing the nation's potential and trend, according to Ding.

"Although some risks now exist in the fast-developing Chinese banking industry, we are optimistic about the potential of the sector thanks to the solid foundation and driving force of the Chinese economy," said Ding.

Last month, the interbank money market suffered a cash squeeze causing the overnight rate of the Shanghai Interbank Offered Rate to soar. The potential crisis ended after the central bank said that it would ensure there would be sufficient liquidity in the market.

Active measures have been taken by the Chinese government to tackle the expanding scale of credit and a concentration on certain companies so it is necessary to make such an adjustment, Ding said.

Temasek's holdings in China Construction Bank slipped to 8 percent from 10 percent in 2012 because of currency rate and market fluctuations.

In addition to those in the finance industry, Temasek's acquisitions in China also include investments in Alibaba Group Holding Ltd, China's biggest e-commerce company, and Kunlun Energy Co, a gas transmission company under China National Petroleum Corp, Kweichow Moutai Co Ltd and Shanghai Pharmaceutical (Group) Co Ltd.

"A new investing area will be China's State-owned assets amid the restructuring and reform of SOEs, which are part of the country's economic development transformation in which we will absolutely invest," said Ding.

Gu Yanfei, managing director at Temasek China, said the company has also been cooperating with the State-owned Assets Supervision and Administration Commission to improve the management and operational skills of both Chinese SOEs and Temasek.

New investment opportunities include industries such as energy, resources, telecommunication, media, life sciences, consumer goods and technology, according to the company.

Projects include the China-Singapore Jilin food production zone and Singapore-Sichuan high-tech innovation park, which are under construction. Those investments were made because of confidence in China's urbanization process, according to Ding.

"Most projects relating to China's urbanization are large-scale and being developed with the cooperation of local governments," said Ding.