Despite the global credit crisis, the $130-billion Sinagaprean wealth fund owner, Temasek Holdings Pte, has recorded a net profit of S$18.2 billion ($12.82 billion) for 2007-08. Its portfolio value rose 13 per cent to S$185 billion from S$164 billion the previous year.

However, it cautioned that the after effects of the global credit crisis would linger for the next two year.

Temasek chairman S Dhanabalan said in the firm's annual report that the fall-out of the credit crisis will continue to dampen the global economy over the next 24 months, sharply escalating oil and food prices and beginning to test inflation expectations with limited opportunities in this climate.

The state-owned wealth fund's record profit which has doubled was largely due to asset sales of S$17 billion, up from S$5 billion in the previous year. In its largest-ever expenditure on new investments Temasek also plowed S$32 billion into new investments, up from S$16 billion a year earlier, also indicating the global increase in acquisitions by sovereign wealth funds.

The US sub prime debacle, which compelled banks to write off more than $500 billion, was an opportunity for Temasek, which made investments in Merrill Lynch & Co and Barclays Plc and also raised its stake in Standard Chartered to 19 per cent from 13 per cent.

The bulk of its investment portfolio of 40 per cent, up from 38 per cent the previous year,  is in the financial services investment segment.

Investment in stock market-traded assets such as Merrill and Singapore's Keppel Corp, among others, formed 80 per cent of Temasek's portfolio, though its return from investments showed a decline of 7 per cent from 27 per cent last year.

In 2007-08 Temasek's net investment outside the Asian region for the first time exceeded investments in Asia.

Singapore now makes up for a third of their portfolio for investments which was half about for years back, while investments in Asia is up 41 per cent from 16 per cent and OECD countries account for 23 percent, down from 32 per cent in 2004.

In this region it also owns stakes in India's ICICI Bank and are lenders in Indonesia, South Korea and Pakistan as it considers leading lenders as being ``proxies'' of their economies.

Temasek now wants a third of its investments each in Singapore, OECD countries and other Asian nations.

In India, Temasek has investments with the Tata group in Tata Sky, a direct-to home TV broadcaster, Bharti Infratel, among others.

Although declaring good results it is apprehensive about that the global credit crisis which will squeeze investment opportunities and dampen economic growth by at least two more years.