SINGAPORE, Sept 30 (Reuters) – Singapore-based Temasek Holdings (TEM.UL) said market valuations had yet to price in a global economic downturn and the public investor was waiting for further declines before step up its investments.

“Current valuations do not reflect the downside risk we see in the next 12 to 18 months,” Temasek chief investment officer Rohit Sipahimalani said Friday.

“I expect these valuations to correct, we will further accelerate our pace of investment,” Sipahimalani said during a session at the Milken Institute Asia Summit in Singapore.

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Temasek remains committed to its four major investment trends, including digitalization, longer life, sustainable living and the future of consumption, he said.

“I think those trends are still valid,” he said. “In the long term, we will continue to invest alongside them with some nuances.”

Stock markets around the world have fallen sharply this year as sharp interest rate hikes by inflation-fighting central banks raise fears of a recession or economic slowdown.

Sipahimalani said markets hadn’t forecast any major declines in earnings and were instead pricing in growth in 2023.

“Even in a mild recession, you’re likely to see, typically, a double-digit decline in earnings,” he said, adding that earnings could fall by as much as 15%.

Temasek, which owns some of Asia’s largest companies, such as DBS Group (DBSM.SI), China Construction Bank (601939.SS) and Standard Chartered (STAN.L), is primarily rooted in Asia.

The investment firm has a 63% exposure to the region, measured by the underlying assets of its portfolio companies, most of which are in Singapore and China.

“The UK hasn’t been a major investment destination for us,” Sipahimalani said. “Whether it’s some kind of digitalization or longer lifespans, and health tech, biotech or sustainable living, the main areas we’ve seen happen are found in markets like the United States and China.”

Temasek remains bullish on China longer term based on his investment themes, Sipahimalani said.

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Reporting by Yantoultra Ngui; Editing by Anshuman Daga and Gerry Doyle

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