FTX stepping on a mine, the shadow has not dissipated! Temasek's latest investment trend: not touching cryptocurrencies, optimistic about AI applications and European assets.

Najeeb Hamiye, Global Head of Investments at Temasek, stated in an interview on Wednesday that the company is currently working to absorb the massive loss caused by the collapse of the cryptocurrency exchange FTX, and as a result, cryptocurrency investments are currently "not in consideration." He also shared Temasek's strategic layout in artificial intelligence, the European market, the Middle East region, and the defense sector. "We do not directly invest in cryptocurrencies," Hamiye said, citing regulatory uncertainties in the industry. "I cannot predict what will happen in the future, nor can I predict the role cryptocurrencies will play in the mainstream economy, depending on the potential regulatory policies that may be implemented." Currently, the company focuses on blockchain and its infrastructure, with investment logic based on the practical value that this technology can create for the real economy. Temasek's investment in the now bankrupt FTX cryptocurrency exchange led to a $275 million write-down in 2022, triggering widespread criticism in Singapore. Then Deputy Prime Minister and Finance Minister Heng Swee Keat called the loss "disappointing" and damaging to Singapore's reputation. Other key points from the interview include: - More focus on AI applications rather than cutting-edge models When asked about what is more important for long-term investors, Hamiye emphasized the widespread application of artificial intelligence (AI) and building a business ecosystem around AI, rather than chasing cutting-edge models. "Not all scenarios require cutting-edge models. The key is application, and those companies that embrace AI and build moats around it." His long-term bet is on the application of AI at the physical layer: automation, Siasun Robot & Automation technology, and industrial process optimization. Temasek aims to increase the proportion of AI investments in its portfolio from 6% in the latest fiscal year ending in March to 15% by 2031. Hamiye added that the AI investment cycle is still in its early stages and will continue for decades, even though valuations in some areas of the industry have disconnected from fundamentals. He stated that Temasek's investments cover the entire AI value chain, including energy infrastructure and data centers, controlling risks at a "very, very low" level through long-term contracts with highly creditworthy counterparties. - Focus on luxury goods and industrial sectors in Europe Hamiye revealed that over the past two years, Temasek's investments in Europe amounted to around 12 billion (USD 14 billion), second only to the United States. Ignoring macro and political noise, he pointed out that Europe has a unique competitive advantage in the world's leading luxury goods, consumer brands, energy transformation, and family-style industrial sectors, and Temasek will participate in them with long-term patient capital. Regarding the Middle East region, he stated that the long-term transformative process in the region remains unchanged, but the consequences of the conflicts have not yet fully manifested. "I still see the long-term development prospects of the Middle East in the global differentiation in the future... However, we must wait and observe what consequences this conflict will bring." - Investing in defense sector with a pragmatic approach When asked if defense contractors should be included in their investment portfolio that emphasizes sustainability and ethical investment, Hamiye stated that Temasek takes a pragmatic approach, neither fully embracing nor completely excluding the sector. The company primarily focuses on dual-use military technology. Biological and chemical weapons are absolutely outside the investment scope. Temasek's investments in this sector are limited to ST Engineering. Reportedly, ST Engineering is a global leading technology, defense, and engineering group headquartered in Singapore, and one of the largest defense and engineering conglomerates in Asia. "We will evaluate each investment individually," Hamiye said, including corporate governance and its impact on real-world conflicts.