(Bloomberg) -- Singapore state-owned investor Temasek Holdings Pte continues to see China as an important market, despite setbacks due to regulatory crackdowns and Covid lockdowns. 

Temasek will hunt for opportunities in artificial intelligence, city infrastructure and what it brands as “deep tech,” a phrase often referring to cutting edge technology such as semi-conductors, managing director Martin Fichtner said during an earnings call on Tuesday. 

China has been one of the best performing markets despite volatility, said Temasek chief investment officer Rohit Sipahimalani. “Most of the regulatory headwinds are behind us.”  

Temasek’s significant exposure to China makes it vulnerable to the regulatory headwinds and economic slowdowns brought on by stringent Covid restrictions in the world’s second largest economy. Despite reduced exposure, Temasek’s stance on China stands out especially as investors become wary of the government’s far-reaching crackdowns that have dented valuations for consumer internet, gaming and fintech firms.

The company isn’t entirely bullish. China could have challenges meeting its 5.5% growth target, as it faces headwinds from property and US-China tensions, said managing director Lim Ming Pey. The company’s China exposure dropped to 22% as of the end of March compared with 27% a year earlier, due to market downturns. 

The top China funds are still attracting money. Venture outlets including Sequoia China, IDG Capital and Qiming Venture Partners corralled about $13 billion in total from pension funds and endowments across US, Europe, Middle East and Southeast Asia in recent weeks. 

Less established outlets have struggled. Venture funding in China plummeted at the start of this year. VC and private equity funds raised only $6.2 billion in the first five months of 2022, a 90% drop from the previous year, while startup investments slowed 40% to $34 billion, according to data from research firm Preqin.

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