The global economic outlook may be relatively sanguine, but market valuations were getting high.

That was the message from Singapore’s massive state-owned investment firm Temasek at its annual review on Tuesday.

“Where we saw increased market valuations, we took the opportunity to divest into the positive momentum in some of our holdings,” Michael Buchanan, head of portfolio strategy, said on Tuesday.

“Global growth is likely to be supported by both emerging and mature economies. This positive trend may already be reflected in market valuations, which now look a bit stretched,” he said, adding that expectations that some central banks plan to reduce easing measures were also a risk for markets.

The firm reported on Tuesday that its portfolio rose to a record 275 billion Singapore dollars (about $197 billion at fiscal year-end) — up 13 percent year-over-year in local terms — for the year ended March 31.

But at the same time, Temasek was in net divestment mode for the fiscal year, investing S$16 billion and divesting S$18 billion in the portfolio. That marked the first net divestment position since the end of March, 2009.

That reflected a cautious outlook, company representatives said on Tuesday.

Chia Song Hwee, Temasek’s joint head for the portfolio management group, noted that the firm hadn’t started the year with a plan to divest more assets than it bought.

“It so happened that given the market environment and high valuations, we see less investment opportunity because we just find that, generally speaking, the market pricing is too high,” Chia said.

Rohit Sipahimalani, joint head of portfolio strategy, noted that the U.S. market, trading at 18 times forward earnings was at a 10-year high.

The “stretched” valuations in public markets were a driver of the portfolio’s increased allocation to unlisted assets. Unlisted assets rose to 40 percent of the portfolio by the end of the fiscal year, up from 39 percent a year earlier and 33 percent in fiscal 2015.

But, Temasek also noted that private investments were seeing a lot of competition.

Dilhan Pillay Sandrasegara, joint head of the investment group, said negotiated transactions with private companies, including private equity deals, were seeing competition.

“Whether it’s the U.S., China, India, Europe, there’s a lot more competition and it comes from even new sources of capital,” Sandrasegara said, adding that his company was no longer just pitted against private equity funds and sovereign wealth funds.

“Now we’re seeing family offices coming into the space that we’ve traditionally played in, and so it’s a very competitive environment and there’s lots of liquidity there.”

Other analysts pointed to concerns over valuations.

Rachel Ziemba, managing director at Roubini Global Economics, told CNBC that many big funds were chasing the same assets.

“Valuations are getting pricey. This is something we hear from a lot of sovereign investors,” she said. She noted, however, that Temasek’s focus on Asia, particularly in banks and retail, puts them in a better position than some competitors.

She said she expected Temasek would dig further into frontier Asia economies, such as Vietnam and those in South Asia.

Indeed, Temasek said that it increased some investments in India, investing in life insurance company SBI Life and Crompton Greaves Consumer Electricals, as well as increasing its stake in HDFC Bank.

Others were concerned about Temasek’s China exposure.

“China is coming down hard on bad or extended credit and investing overseas by their companies, which will impact various stock markets and most importantly gross domestic product growth in certain countries,” said Arun Kant, CEO of Leonie Hill Capital.

Nomura recently estimated that China’s outstanding non-financial sector debt hit 191.3 trillion yuan ($27.96 trillion), or 251 percent of GDP in the first quarter, up from 158.3 trillion yuan, or 231 percent of GDP, at the end of 2015.

In May, Moody’s Investors Service expressed concern that China’s effort to support economic growth would spur higher debt levels, and the ratings service downgraded the mainland’s sovereign credit rating to A1 from Aa3 while changing its outlook to stable from negative.

To be sure, Temasek’s outlook was for continued consumption growth in China, with Chia saying the company was “comfortable” with its mainland investments, expecting they were “well-positioned” to manage credit risks.

The company has bets on China’s consumers and tourists, including stakes in Alibaba, JD.com and Ctrip.

Some analysts pointed to concerns about the general market outlook.

“Fund managers are concerned about the uneven moderate pace of global growth, relatively mild inflation that may persist and current high valuations across major asset classes,” CIMB Private Bank economist Song Seng Wun said. “Then there is the impact of the sharing economy, disruptive technology on bricks-and-mortar business, and in the meantime, we are all worried by the erratic behavior of President [Donald] Trump.”

Temasek said the net divestment wasn’t a matter of preparing for investment opportunities in a potential market correction. In fact, Sandrasegara noted the competition also had dry powder as allocations to private equity rise amid global yield chasing.

Sipahimalani noted that Temasek almost never won auctions for assets, but it was able to negotiate one-on-one deals when it could demonstrate that it added value as a “patient,” long-term investor with a solid network of Asian connections.

Temasek has been eyeing investments in Europe, however, despite political uncertainty from upcoming elections and Brexit talks. Economic growth there, Buchanan said, was “above-trend.”

While credit conditions had loosened since 2013, the European Central Bank was expected to start normalizing its monetary policy next year, Buchanan said.

“Not all corporates in Europe have easy access to appropriate forms of capital. And this may present some opportunities for us to invest in good European companies that are looking to grow,” Buchanan said.