By Yantoultra Ngui

SINGAPORE (Reuters) – Singapore’s Temasek Holdings said that market valuations had not yet priced in a global economic recession and that said the state investor was waiting for further declines before stepping up investments.

“Current valuations are not reflecting the risk of downturn we see in the next 12 to 18 months,” Temasek’s chief investment officer, Rohit Sipahimalani, said on Friday.

“I do expect as these valuations correct, we will again step up our pace of investment,” Sipahimalani told a session at the Milken Institute Asia Summit in Singapore. Temasek remains committed on its four major investment trends, including digitization, longer lifespans, sustainable living and the future of consumption, he said.

“I think those trends are still valid,” he said. “For the long term, we will continue investing alongside them with a few nuances.”

Stock markets globally have fallen sharply this year as big increases in interest rates by inflation-fighting central banks raise worries about a recession or economic slowdown.

Sipahimalani said the markets had not forecast any major decline in earnings and were instead factoring in growth in 2023. “Even in a mild recession, you will probably, usually see a double-digit decline in earnings,” he said, adding that earnings could decline by as much as 15 percent. Temasek, which owns some of the biggest Asian companies, such as DBS Group (OTC:), China Construction Bank (OTC:) and Standard Chartered (OTC:), is mainly anchored in Asia.

The investment firm has a 63% exposure to the region as measured by underlying assets of its portfolio companies, most of which are in Singapore and China. “The UK hasn’t been a significant investment destination for us,” Sipahimalani said. “Whether it’s sort of digitization or longer lifespans, and health tech, biotech or sustainable living, the main areas we’ve seen that happen are in markets like the U.S. and China.” Temasek remains bullish on China in the longer term based on its investment themes, Sipahimalani said.