Temasek may cut big exposure to banks: Nomura report

SINGAPORE (Reuters) - Singapore state investor Temasek's new CEO Charles Goodyear may cut the fund's large holdings in banks and trim stakes in other firms such as SingTel (STEL.SI) as he reallocates money to energy and consumer sectors, Nomura said in a report.

Chip Goodyear, the former CEO of BHP Billiton (BHP.AX), who takes over on Oct 1, had a strong record of capital management, M&A and overseas expansion, Nomura's head of equity research of Singapore and Southeast Asia, Jit Soon Lim said, in a 100-page strategy report on Tuesday.

"He (Chip Goodyear) might look to rationalize Temasek's large exposure in banks (40 percent) and reallocate to under-represented sectors such as energy/natural resources and lifestyle/consumer," Nomura said.

The study is one of the first indepth reports on Temasek's investment strategy. Temasek is unlisted and only issues an annual report.

Temasek's portfolio value slumped S$58 billion ($40 billion) or 31 percent in the eight months to November to $87 billion, as a turmoil in global markets slashed the value of its investments in financials such as Merrill Lynch and Barclays (BARC.L).

Temasek sold its stake in Bank of America (BAC.N) in the first quarter, taking a hit of at least $3 billion.

Temasek's current CEO Ho Ching, wife of Singapore's prime minister, said last month the investment firm is refocusing its investments toward emerging markets.

Temasek still holds large stakes in banks such as DBS (DBSM.SI), Standard Chartered (STAN.L) and India's ICICI (ICBK.BO).

Energy and resources made up just 5 percent of Temasek's portfolio as of end-March.

Nomura said Temasek had a low gearing and recurring cash flow of S$4-S$6 billion which gave it the flexibility to rebalance its portfolio.

"In our view, Temasek is well-positioned to expand its portfolio opportunistically in the current market environment, given its gearing potential," the report said.

Nomura said Temasek may trim its exposure to companies such as SingTel, StarHub (STAR.SI), SMRT (SMRT.SI) and Sembcorp Industries (SCIL.SI) over the long-term given its high shareholding in these "non-strategic companies."

Temasek has a 55 percent stake in SingTel, Southeast Asia's biggest telecom firm.

($1=1.440 Singapore Dollar)

(Reporting by Saeed Azhar; Editing by Anshuman Daga)