Temasek walked into market minefield last quarter with new bets on Chinese education stocks, Didi Global before July slump

Singapore’s state investment arm initiated four new positions in Chinese companies, mainly education stocks, plus a stake in Baidu and Didi Global

These companies suffered among the fiercest sell-offs this year in July when China began probing data security breaches at Didi Global

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Office workers walk past Temasek Holdings’ office at its headquarters in Singapore. Photo: AFP

Published: 11:25am, 17 Aug 2021Updated: 9:50pm, 17 Aug 2021

Temasek Holdings walked into a stock market minefield in China last quarter by putting more money into several Chinese education and tech-platform stocks and disclosing a big stake in ride-hailing firm Didi Global, before they sank in July amid a regulatory storm.

The Singapore state investment arm initiated four new positions in the depositary shares of Chinese companies – 17 Education & Technology, Baidu, Kanzhun and New Oriental Education Technology – during the three months to June 30, according to its 13F filing with the US Securities and Exchange Commission (SEC) late on Monday. It disclosed a US$466 million stake in ride-hailing firm Didi Global following its New York listing in June.

These companies suffered among the fiercest sell-offs this year in July when the Cyberspace Administration of China began probing data security breaches at Didi Global within hours of its NY listing on June 30. Education firms also slumped in July, after the Chinese government widened its scrutiny and slammed for-profit after-school tutoring businesses, sending stocks in the sector into a nosedive.

Signage at the Didi Global Inc. offices in Hangzhou, China, on Monday, Aug. 2, 2021. China will step up oversight of its ride-hailing companies, adding to a widening campaign by Beijing to rein in its internet sector. Photographer: Bloomberg

The regulatory assault precipitated a US$1.2 trillion slump in Chinese technology and education stocks listed in the mainland, Hong Kong and US markets in July, leaving the market guessing as to the extent of President Xi Jinping’s drive to fix income inequality and market malpractices.

“Didi‘s previous disclosure indicated that we, as an existing investor, had participated in the company’s IPO,” Temasek said in an email on Tuesday in response to questions from the Post. “Our investments around the world are guided by an intrinsic value test where we invest against a risk-adjusted cost of capital.”

The firm declined to comment whether those stakes have changed materially since June 30, pointing to its investment review issued last month. That review indicates Temasek’s interest in education stocks may have been bigger.

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