Forget about Investing for the “Long Term” - Temasek’s new investment strategy has changed into “Buy High, Sell Low!!!”
What else could you possibly deduce from the fact that Bank of America’s shares have surged 74% since our dear Ho Ching & company decided to divest of their BoA shares? This fact has been graciously pointed out to us by the New York Times – article appended below.
The world is watching our dear Singaporean SWF. And Temasek is becoming the laughing stock of the world financial community.
A commenter on the NYT blog has said:
Regarding Temasek’s decision to sell BofA shares near the low – perhaps sovereign wealth fund managers are really just government bureaucrats masquerading as fund managers? If anyone is going to take a loss on an investment – I’m glad it’s them.
— Posted by Jay Young
Earlier, David Faber of CNBC noted that Temasek’s loss was one of the biggest losses ever recorded by a single fund on a single investment in Wall Street’s history.
Rear Admiral (NS) Lui Tuck Yew was the Minister of State for Education until March 2009, when he was promoted to Acting Minister for Information, Communications and the Arts with effect from 1st April 2009. With his promotion, he displaced the incumbent Dr Lee Boon Yang, who now found himself without a job.
Only 25 days after RAdm Lui’s promotion, Dr Lee Boon Yang was the newly appointed non-executive Chairman of Keppel Corp, Singapore’s largest industrial conglomerate. It was an event of little fanfare, and by the lack of any noise made by Keppel shareholders, you would have thought that everybody is happy about the change in leadership at the helm of Keppel’s board of directors.
However, a careful examination of Dr Lee Boon Yang’s CV, and the demands of the role of Chairman of the Board of an industrial conglomerate like Keppel – leaves the interested observer rather puzzled.
“Yes, they were good long term investments with risks thoroughly assessed”
- Minister Tharman, Jan 2008 on Singapore investments in banks.
These were the words of Singapore’s Minister of Finance, slightly more than a year ago when Singapore’s SWFs made major investments in a few global financial institutions. Take note, in particular, that Minister Tharman was defending the individual investments made by the SWFs in the banks – not the portfolio performance.
A year later, everything had changed. The stock markets had declined significantly and the global financial system was in major turmoil. The stock prices of the big banks had sunk to record lows after having their balance sheets destroyed by the dislocation in credit markets. Seeing that his original argument was no longer tenable, Tharman changed his tack as the investments in the banks sunk deeper and deeper into the red. Now, instead of taking the line that the investments in the banks were good long term investments, he instead argued that Singapore’s portfolios were well diversified, and hence Singapore’s investments were fine.
‘We would be worried if global banks comprise a large proportion of the portfolios of GIC and Temasek, or for that matter, any other highly vulnerable industry globally,’ he said. ‘But these are diversified portfolios, with not a large degree of concentration risk.’
- Minister Tharman, Jan 2009, on Singapore investments in banks.
Three cheers to Conrad Raj today for his much needed commentary on Temasek’s divestment of BoA in TODAY. Conrad is one of the few independent voices in Singapore’s journalism scene who truly is bold and daring to ask the tough questions of Singapore’s corporate elite.
Singaporeans need to thank him for calling Temasek Holdings into account and for voicing out the concerns of Temasek’s true shareholders – ordinary Singaporeans like you and me.With parliament unwilling and unable to do its job of demanding transparency and accountability from Temasek, it is absolutely necessary for independent journalists and the media to ask tough questions and demand straight answers from the stewards of Singapore’s capital. Indeed, Singaporeans deserve much more than to be patronized repeatedly by being told of the SWFs’ “long-term” view of their investments.
I hope that Conrad and his business team will be all the more bold in questioning the managers of our country’s savings – for it is only when shareholders demand and monitor it that corporate governance becomes effective in protecting the interests of those it is supposed to serve.
Singaporeans too should ask the tough questions needed by writing to the press, or picking up their own pens in their blogs.
As DBS staff bid their final farewell to chief executive Richard Stanley, who died of leukemia last Saturday, the shares of Singapore’s biggest bank continued to rally. DBS stock price continued its rise, even as Mr. Stanley’s cortege passed through Shenton Way this afternoon. This is despite the fact that in the last four months, it has been Mr. Koh Boon Hwee, Chairman of DBS and a non-banker, who has been steering the DBS ship amidst Stanley’s absence and Singapore’s steepest recession.
DBS’ stock rise comes amidst a broader market rally. It is thus not clear if the stock rise indicates that investors are placing confidence in the bank’s chairman, or if it is a simply a stock movement in tandem with the broader market. The DBS board, nevertheless, feels that Mr Koh is worth his weight in gold.
In comparison to Mr. Stanley who was paid almost $5 million for eight months of work in 2008, Mr. Koh has received $2 million in ’special remuneration’ from DBS for assuming an ‘active management oversight’ role from Jan 1 to April 30 last year. Read the rest of this entry »
Lee Kuan Yew is all over the news today, talking about GIC’s 25% loss. In particular, he has been defending GIC’s investments in the banks. I’ve written extensively about these investments, but MM Lee’s latest attempts and defending GIC are some of the crappiest shit I’ve seen in a while.
Damn it – I’m just absolutely fed up with Lee’s crap. For goodness sake already, just own up and admit that GIC did not have a clue.
’We became cash-rich and when the market fell, we went into UBS and Citi,’ he said. ‘But we went in too early. That’s part of the ride.’
…
‘How could we have known this was the extent of the damage? You look at all the big-name banks – they have gone down, misjudged the situation, ruined their careers,’ Mr Lee said.
Here’s the octogenerian politician, trying to wriggle his way out by claiming that GIC could not have known the extent of the damage. He blames the big-name bankers for ruining their careers, and says its all “part of the ride”.
Well, thats a bucketload of bullcrap.
You want to know how you could have “known the extent of the damage”, Mr Lee?? I’ll Tell You HOW!!!
In news just out, GIC has agreed to convert its preferred stake in Citigroup to Common Equity, to go along with the US government’s continued bailout plan for the company.
GIC converts preferred notes in Citigroup to common shares
By May Wong, Channel NewsAsia | Posted: 27 February 2009 2026 hrs
SINGAPORE: The Government of Singapore Investment Corp (GIC) has said it will convert its convertible preferred notes in the US lender Citigroup to common stock in a bid to help shore up the troubled US lender.
The exchange price is US$3.25 a share – a 32 per cent premium to Citigroup’s closing price on Thursday. The price is way under the conversion price of US$26.35 a share under the original terms of the investment. Read the rest of this entry »
In April 2008, this blogger took note of Lee Kuan Yew’s comments in an interview with Bloomberg. The octogenarian Minister Mentor was defending GIC, the Singaporean sovereign weath fund of which he is Chairman, which had made investments in UBS and Citigroup just months before. I have previously dealt with Citigroup and the prospect of its equity investors being wiped out due to nationalisation. But for this post, the subject of my analysis is UBS.
The Minister Mentor went on the record complimenting the private banking franchise of UBS, citing this as the reason why GIC made a significant investment in the famous Swiss bank:
“The franchise of the banks, the expertise that they have, under proper leadership, they will be able to recover and rise again … Will there be another Swiss bank like UBS for wealth management? I doubt it, we doubt it, that is why we invested in it.” -MM Lee, in a Bloomberg Interview, Apr 08
Well well, things are getting exciting. All of us know that GIC is reported to have incurred losses of US$33 Billion. All of us know that the government keeps on saying that GIC & Temasek are long term investors. And guess what, the press reported that GIC expects long-term returns from its bank investments (and I think, that’s what Temasek expects as well)
Singapore’s GIC Loses $33 Billion as Assets Tumble, WSJ Says By Andrea Tan and Chris Peterson
Feb. 17 (Bloomberg) — Government of Singapore Investment Corp., one of two sovereign wealth funds owned by the island, lost as much as S$50 billion ($33 billion) in 2008, the Wall Street Journal said, citing two people familiar with the matter.
The fund doesn’t plan to get rid of its investments including in Citigroup Inc. and UBS AG even as asset values plummet, the newspaper said. GIC expects the two banks to provide substantial long-term returns, according to the report.
Sovereign wealth funds in Asia and the Middle East have pumped money into global financial institutions to help replenish capital eroded by writedowns and losses that have topped $1 trillion globally. GIC, overseeing more than $100 billion of reserves, has invested about $18 billion in UBS and Citigroup since December 2007.
Entries (RSS)