Temasek, Singapore’s state-owned investment firm, is keeping cryptocurrency investments “off the table” following a significant $275 million writedown from its FTX investment in 2022. The firm is now focusing its capital on the adoption and application of artificial intelligence, aiming to increase its AI exposure from 6% to 15% by 2031. Temasek is also actively investing in Europe, particularly in luxury, consumer brands, and industrials, while maintaining a practical approach to the defense sector.
Four years after the dramatic collapse of FTX, Singapore's state-owned investment firm Temasek remains hesitant to dive back into the cryptocurrency market. Nagi Hamiyeh, president of Temasek Global Investments, reiterated that crypto investments are "still off the table," citing ongoing regulatory uncertainties within the sector. While not completely ruling out future possibilities, the firm is currently prioritizing investments in blockchain technology and its underlying infrastructure, focusing on its practical applications for the real economy.
Temasek's prior investment in the now-bankrupt FTX exchange resulted in a significant writedown of $275 million in 2022, a move that drew considerable criticism and was described as "disappointing" by then-Singapore Deputy Prime Minister and Finance Minister Lawrence Wong, who noted its damaging effect on Singapore's reputation.
Nagi Hamiyeh, president of Temasek Global Investments, said crypto investment is "still off the table" for the company as it strives to move past a substantial loss in crypto exchange FTX.
"We don't have directly any, any investment in crypto," Hamiyeh told CNBC's Sri Jegarajah on Wednesday, citing regulatory uncertainty in the sector. "I can't forecast what happens in the future, and the role that crypto is going to play in the main economy, depending on the different regulations that might happen."
For now, the company focuses on blockchain and its infrastructure, based on what the technology can do for the real economy.
Temasek's investment in the now-bankrupt FTX cryptocurrency exchange led to a writedown of $275 million in 2022, drawing much local criticism. Lawrence Wong, who was Singapore's deputy prime minister and finance minister then, called the loss "disappointing" and damaging for Singapore's reputation.
Here are the other key takeaways from the interview:
AI application over frontier models
Hamiyeh said he would bet on adoption of artificial intelligence and building commercial ecosystem around it, over pushing for frontier models, when asked what matters more for a long-term investor.
"Not every situation needs frontier models. It's all about the applications, and it's all about the companies that embrace AI and build a moat."
His longest-term wager is on the physical implementation of AI: automation, robotics and industrial process optimization. Temasek aims to lift AI exposure from 6% of its portfolio in the latest fiscal year ended March to 15% by 2031.
The AI investment cycle is still early and will run for decades, Hamiyeh added, even as valuations in parts of the sector have run ahead of fundamentals. Temasek invests across the full AI value chain, including energy infrastructure and data centers, where long-term contracts with highly rated counterparties keep risk "very, very minimal," he said.
European luxury, industrials
Hamiyeh disclosed that Europe has drawn about 12 billion euros ($14 billion) of Temasek capital over the past two years, behind only the U.S.
Looking past the macro and political noise, he pointed to Europe's "right to win" in world-leading luxury, consumer brands, energy transition, and family-owned industrials in the continent, where Temasek comes in with long-term patient capital.
On the Middle East, he said the region's long-term transformation story remains intact, but the ramifications of the conflict have yet to fully play out.
"I still believe that the long-term view is there in terms of what the Middle East's role is going to be in the new bifurcated world ... however, we have to wait and see what are the ramifications of this conflict."
Practical approach on defense
Pressed on whether defense contractors belong in a portfolio that emphasizes sustainability and ethical investing, Hamiyeh said Temasek takes a practical approach and won't completely rule the sector in or out.
The firm mainly looks at dual-use technologies that could be used in civilian settings, or in warfare. Biological and chemical weapons are categorically off-limits. Temasek's only exposure to the space is ST Engineering.
"We look at every investment on a stand-alone basis," said Hamiyeh, including corporate governance and their contribution to any real-world conflict.
— CNBC's Isabella Lok contributed to the report.
