CNBC David Faber described Temasek sale of BOA as “one of the worst investment” for one single fund
May 16th, 2009 | 
Author: From The Informant Network Team
David Faber from CNBC:
“A $4.6 billion loss on a $5.9 billion dollar investment. TPG lost $2 billion really quickly on Washington Mutual, but this one guys, is right up up there, as one of the worst investment during this period for one single investment fund.”
Now, what does the Lee family think of this latest investment loss?
Ho Ching, Temasek’s CEO, wife of Prime Minister Lee and daughter-in-law of MM Lee:
“No. I think if you want to run life with regret, you will end up doing very little.” (when asked if she had any regrets about leaving Temasek, Reuters 6 February 2009, source)
Lee Kuan Yew, GIC’s Chairman, father of Prime Minister Lee and father-in-law of Ho Ching:
“When we invest, we are investing for 10, 15, 20 years. You may look as if you are making a big loss today, but you have not borrowed money to invest. You will ride the storm, the company recovers, your shares go up.” (CNA, 7 February 2009, source)
Lee Hsien Loong, Prime Minister of Singapore, husband of Ho Ching and son of MM Lee:
“Both Temasek and GIC are professional investment organizations, highly regarded around the world for their track record. Management hired all over the world. Boards are competent and experienced. They pursued sustainable returns over the long term, and avoided excessive risk-taking for short-term gains. Thus we have achieved good long term returns through ups and downs in the global economy and market cycles.” (in a speech on 21 October 2008, source)
Since we are investing for the long-term, why did Temasek sell of its stake in BOA so early and at such a low price? In less than a year, it lost 83% of its initial investment in Merill Lynch!
Is Temasek pursing “sustainable returns” over the long term by pulling out so early from BOA? Does Ho Ching still have “no regrets” over such a disastrous loss? Of course she won’t, since the money is not from her own pockets.
Does Singapore still has a future when its SWFs are bleeding our precious reserves dry with such ill-judged investments?
Imagine using the $4.6 billion dollars to help ordinary Singaporeans tide over the current economic turmoil by subsidizing medical bills, providing retrenchment benefits and paying for the education of needy students.
The government kept telling the people that we should be self-reliant and not develop a clutch mentality. It is not as if it has no means to help the less fortunate in society. It is so filthy rich that it is able to blow billion dollars away in an instance without blinking an eyelid!
In her latest speech as Temasek’s CEO, Ho Ching said:
“We must do things today with tomorrow clearly in our minds. The story of Temasek is likewise a journey, each generation doing things yesterday and today with tomorrow very clearly in our minds – to make a difference to our fellow men and women, to support and build a future where Asia and Singapore can realise their full potential for their people, and to put in place the foundation for a better tomorrow.” (read her speech here)
Forget about Asia, Madam Ho. Haven’t you caused enough trouble in Thailand? Obviously the investment decisions made by you during your tenure did not take the future into account. How else can you explain the terrible losses suffered by Temasek from the purchase of Shin Corp, ABC learning and now Merrill Lynch?
The Singapore government must account to the people immediately on the latest loss by Temasek since it is a corporate entity fully owned by the Ministry of Finance which is in turn financed completely by taxpayers’ monies.
It is a shame that the PAP pay only lip service to transparency and accountability and continue to demand us to pay them exorbitant salaries only to screw up big time, again and again.
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Let see if any MP will raise this US$4.6 billions loss in parliament.
If not, it shows that we need more opposition MPs to tackle
this issue in parliament.
PAP MPs are not dependable.
didn’t someone just got an award?
welcome to sinkapore! lol
Awesome find, it’s time to let these so called “elites” sweat in their pants, and know that they have some accounting to do to us commmon people.
Pop the champagne…another 1st for singapore!
Lets put things in perspective , despite little hiccups along the way , I think most people are thankful to be living in this little red dot in a sea of green.
Imagine living in Myanmar, I think a person chance of getting a fair justice system is quite slim if wronged.
Imagine living in our immediate neighbours , Singapore is a little paradise that almost 99% of thing are working like clock work. Things have a predictability of working everyday that we may have taken things for granted.
Yeah sometimes we may get worked up about why things didn’t turn out the way we expected , but it is time we appreciate the little things in life. Be kinder and gentler to our fellow citizens.
Lets create good karma and let it accumulate to a big karma of goodness that everyone can share.
Do you know that we are encouraged to share the benefits of our meritorious deeds,
there is this little prayer that buddhist and indeed anyone so inclined are encourage to utter and transmit into the universe.
It goes something like this ” May the merit of this meritorious deed , go on and benefit all sentient beings , meaning all humans , all living things like animals , insects, bacteria, viruses, even higher beings like devas and the likes of higher beings which we may not see, Suffering souls in the lower realms, hungryghosts , suffering humans too . Lets us all share in the merits of a good deed so that is may multiply and create good vibration in the universe so that all beings will achieve nirvana or find ultimate bliss.
Wow this a wonerful prayer of merit to be shared with all sentient beings. Isn’t this wonderful.
The reason why Buddhist and everyone are encouraged to do this prayer of merit sharing is when we get worked up about losses whether material goods loss or any thing we perceived as a loss , we shaould not lose sight of the BIG PICTURE.
After thinking about this practice deeply and for a long time of thinking it through I begin to see the wisdom of the BUDDHA.
He is telling us not to get too sad when we lose something because that thing that we hold dearly is not real and it is only a maya (an illusion ).
Buddha said that all material things are only an illusion. It is the meaning that we attach to those things which will give it reality to us.
For example ,if we attach too much meaning to thing A when we lose it we will feel sad. But thing A only has a finite lifetime, it will not last forever, when I finally realise what Buddha meant , wow it was a earth shattering realisation for me
Why Singaporeans dare not protest about this mismanagement by Temasek.She used our tax payers money to learn lessons in bad investment.No body complaint,no protest,really silly Singaporeans, brainwash by the s’pore shares,GST rebates,S&C rebates, all the sweet talk by govt.MM Lee keeps quiet like a mouse, dare not comment any more, long term investment….
warren buffett no.1 rule for investing: Don’t lose money. Rule no.2: Don’t forget rule no.1
Obviously, temasek has forgotten this rule.
“It’s only when the tide runs out,then you see who’s been swimming naked”
Temasek self-proclaimed long term record has been badly damaged by this haphazard investing behaviour.
We need a bigger opposition party to act as check and balance for managing multi-billion public money! There should be consideration to amend the Constitution to ensure beyond a certain amount of investment in a single fund/institution, there must a referendum for the People of Singapore to vote.
PAP, u will never ever get my VOTE in for you!!!!
The Brutal Truth.
It must be the one who put her there who should regret, not Ho Ching.
If I were her, I would not regret too. Why? Because I would have collected millions of dollars in terms of salary and bonuses over those years when I was “investing” (or going on a buying spree – in simple layman terms = shopping).
So why should anyone in her fortunate position regret at all?
You are paid so highly and given billions of dollars to go shopping freely around the world for anything you feel good about. And nobody will have the audacity to tell you off, but instead they would even turn around to back up you, even to the extent of trying to cover up for your bad judgment and poor investment sense?
Where in the world can one ever get such an excellent job? So, where is there a need to regret? In fact, she should rejoice for the good fortune that she has been enjoying.
Well done, Ho Ching! I am really happy for you.
The Brutal Truth.
It must be the one who put her there who should regret, not Ho Ching.
If I were her, I would not regret too. Why? Because I would have collected millions of dollars in terms of salary and bonuses over those years when I was “investing” (or going on a buying spree – in simple layman terms = shopping).
So why should anyone in her fortunate position regret at all?
You are paid so highly and given billions of dollars to go shopping freely around the world for anything you feel good about. And nobody will have the audacity to tell you off, but instead they would even turn around to back up you, even to the extent of trying to cover up for your bad judgment and poor investment sense?
Where in the world can one ever get such an excellent job? So, where is there a need to regret? In fact, she should rejoice for the good fortune that she has been enjoying.
Well done, Ho Ching! I am really happy for you.
$4.6 billion only? We are still $300 million short for the president to turn his key to unlock our reserves.
This one no need Nathan approval. One key is enough.
She ought to be fired like HP’s ex-CEO.
I wonder if she feels embarrassed about the award? Or maybe she does not have the word embarrass in her dictionary at all.
thankful, the recent performance they made does not justify the amount of pay the claim they deserve. relative comparison with poorer countries forever will get us nowhere. we must compare temasek with other first class fund management, not third world countries. you are using wrong benchmark
We are discussing accountability and abuse of state funds, so thankful, you are clearly a retard bent on distracting the issue at hand. zzz
Expected, suckups at every corner.
Both Temasek and GIC are headed by politicians,how many politicians were good business person? Most are not, else they would not in politics. Since they are not good in business, admit and not lay any hands into business. They shouldn’t be into these money losing businesses in the first place.
“Yeah sometimes we may get worked up about why things didn’t turn out the way we expected , but it is time we appreciate the little things in life. Be kinder and gentler to our fellow citizens.”
If the govt is kinder to us (like making public housing cheaper, public transport cheaper and better), then we will be naturally kinder and gentler to our fellow citizens
It is futile to criticize HC for Temasek’s poor investments. Looking from her point of view, she is merely spending the famiLee fortune. We ought to know since the father, son and daughter-in-law have never shown any accountability. The only way to ensure the famiLee fortune becomes our money is to vote them out along with their goons. Nothing less is acceptable.
Well Done
Top talents in Temasek dun need warren buffet rule, they use their own rule: Buy high, sell low, then resign.
Dear thankful (8:11pm):
It is nice to hear your thoughts on Buddhism. I do agree if we learn to put less emphasis on material things, we will all become happier.
However, Buddhism is very easy to understand, but very very hard to put into practice. How many buddhists can really let go of their material wants? Let’s look at Reverend Ming Yi, who is obviously a kind man and knowledgeable in Buddhist theories. But even he cannot escape the lure of LV bags.
There is this “uproar” over Temasek now and it is not because of greed or other wrong reasons. Basically, the people of Singapore have entrusted their money into the care of the people of Temasek. In fact, we even (involuntarily) pay them huge salaries for this job. But because of their lack of accountability and foresight, they have done a terrible job (as many experts will agree).
It is not Temasek’s money that was lost. It was the money entrusted by the people. Money that could have been used for charitable good benefiting many Singaporeans. Now do you see why we need to right this wrong instead of smiling it off?
You also mention that we should be thankful we are far better off than many of our neighbors. Reminding ourselves of this certainly will make us happier and more content. But there is a difference between being happy with our lives VS not seeking further improvements in our lives.
If we do not strive to change whatever is wrong, then we will never progress. Besides, we may be better off economically than our neighbors but we face other problems too, like far higher costs of living. Our govt loves to compare us against Manila for wages, but against London for living costs. That is self-serving and not helpful at all. If we really want to improve, we should be doing it the other way round!
Dear thankful, I thus hope you will agree with me that Buddhism will not want us to simply laugh away this huge loss of taxpayers’ monies.
No wonder there is no plans for the retrenched to use CPF and no funds to help those jobless this year! You will get your CPF later as you compulsory opt-in for CPF life fund. Song bo?
Thankful !
WTF has A $4.6 billion loss on a $5.9 billion dollar investment by SWF Temasek gotta do with your fucking wisdom of the BUDDHA theory.
Singaporean would be thankful if LTA were to switch off the islandwide ERP gantries for 6.5 yrs then to see such vast amount of money go down the drain.
To thankful :
Most of us deserve to be thankful because we work hard. Very hard in fact if you compare how we work with Taiwanese, Chinese from mainland and HKers.
We live ok with respect to those people in the 3rd world country but it is not a reason why we should question a fundamentally flawed system of governance especially when it has made such a huge loss in Investments.
If the monies had been spend on medical bills or food, it will strengthen our people and :
1. the receiver from the other end of the transaction is probably another Singaporean,
2. it was the people who created the wealth, not the govt investments overseas
3. with a strengthed mind and body, we can make more monies in the future.
4. wasting it overseas is a huge opportunity cost to our own people.
Please wake up Thankful!
yours standards are VERY Low
To thankful :
I correct myself:
We live ok with respect to those people in the 3rd world country but it is not a reason why we should NOT question a fundamentally flawed system of governance especially when it has made such a huge loss in Investments.
YOU should not be allowed to invest public monies since your standards are so low.
What could $4.6 Billions be subsitituted for ??
Switching off all ERP gantries islandwide for 6 years !!!
$4.6 billion….. Better to switch off islandwide ERP gantries for 6.5 years then to waste it that way.
The Lee family should go away.
http://civicadvocator.net/temasek-lost-at-least-us23b#respond
Its crazy that Temasek can lose so much money within a short period of 14 months. SM did said “Singapore is like a speed boat in a storm.” I fully agreed with him from a helicopter view BUT hidden away inside those cabin rooms are sailors popping champagne celebrating 8 month bonuses and cooks are serving French cuisine. Now that the boat is sinking, I don’t really know what should he do to those drunken sailors?
Now, the new story to spin – BOA is only a small part of Temasek overall portfolio….we need to be nimble and willing to cut lost…environment changed, we are switching the fund to CCB of China instead, even Warren Buffet made mistakes and lost money during this period…..
It was journey to the west. Then U-turn and now, journey to the east and journey to somewhere. Actually you are lost..likewise everybody don’t even know where they are?
thankful,
You’re preaching to the choir boys. This should really go out to Ho Ching and the Lee family. How do you expect the populace to lead a martyr’s life of material self denial and sacrifice while the political leaders wallow in a swine’s pool of material excess simply granted by the fact that they are born of “royal” blood?
It has been shown time and again that such a political model is unsustainable, take a look at feudalism any other corrupted form of modern governance, be it capitalism or communism. The reason why governments in countries like Singapore (sham democracy) and China (fake socialism) have such draconian rules on censorship is because they understand the lack of sustainability of their political systems. So best to pull the wool over the sheep’s eyes and reap as much for their own selfish gains while possible. Such is human nature and no religious principle or mantra can change that, the only feasible way forward is a decent system where transparency and accountability protects the rights of the individual citizens. Unfortunately, I can’t see that happening in Singapore any time soon.
Citibank recommended Temasek to buy Merril Lynch and Merril Lynch recommended GIC to buy Citibank. So, what happen?
Why should Ho Ching regret at all?
It has to be the one who puts her there who should regret, take responsibility and apologise to the people of Singapore, not Ho Ching.
It should also be the ones who spoke so well of her in support of her newly appointed position at that point in time when there were some uneasiness or unhappiness about her appointment as head of Temasek, isn’t it?
If I were her, I would not regret too. Why should I? Simply because I would have received millions of dollars in terms of salary and bonuses over those years when I was going on a buying spree (in simple layman terms = shopping) and getting myself to reach the position of the world’s 3rd most influential or powerful woman, making a name for myself.
So why should anyone with a sane mind in her fortunate position regret at all?
You are paid so highly and given billions of dollars to go shopping freely around the world for anything you feel good about. And nobody will have the audacity to tell you off. Instead, they had turned around to back you up, even to the extent of trying to cover up your poor performance, bad judgment and poor investment sense and recklessness?
Where in the world can one ever get such an excellent job?
So, where is there a need to regret? In fact, she should rejoice for the good fortune that she has been enjoying.
Well done, Ho Ching! I am really happy for you.
I now begin to understand the PAP’s own jargon when it comes to explaining cock-ups. Long term means between 3 to 6 months. Short term may mean to do a sub-sale, hit and run, just like in the mid 90’s when properties were bought and resold within the two week option period.
50 odd km means a long coast line.
Oh ya, they also have a new meaning to the word ‘assembly’ where even one person can also be charged for illegal assembly.
Let’s wait for the next lesson, to know what other meaning the PAP will introduce to the English language.
Remember, the PAP never admits its mistakes.
we are wasting time here with the PAP ppl
all of them are under lighting protecting plan, so nothing will happen to them.
our opposition are too weak to be able to counter them, WP also not waking their idea till now, after Spore put in so much hope on them.
so where’s the president ? Ain’t he supposed to be watching our reserves ? Where are the “keys” that he is supposed to hold ? Or he lost the “keys” to the government and went to eat roti prata ?
Indeed we should be thankful for the “little red-dot” which os actually I call a “miniscule-black-dot”. Don’t get me wrong, but indeed it is black on a map. And being Red means it is likeblood on the outside of one’s skin. That We Are Bleeding! Financially that is!
The toxic assests of American “1st World Class” of Elitist “Democracy” knows no boundaries nor temperance of “Meritorcracy” which is advocated by our garmen too. Such thinking means in hidden silence, also means that if Heaven has not endowed you, then you’ve therefore been “sidelined by heaven and so predestined” for failure in “World-Class” competition!
This kind of thinking is lobsided and certainly not fron the wise and humble. It is the very the same very type of NON-critical indepth and far reaching VISIONARY thinkings of the GW Bush era. The now infamous 8 yr era that now has severely bankrupted America and my nations of the world.
Indeed highly paid and irrationally rewarded individuals of meritocracy are the very soucre of this world-wide financial crisis. As they are only now seen as Crutches, Since “They don’t own a single cent of the enormous monies they invest”. And stands to be rewarded for successes. BUT never to be Acountable for even Repeated Failures! WORLD-CLASS CRUTCH CIRTICAL THINKERS INDEED!
A saying goes, “Self praise IS international disgrace” is oh so true. Or a local dialect saying in similar meaning, “Kar key oh kar buwei chow cho”! = slef praise is not so fishy” yah!
Are self-professed ‘great leaders’ truly wise & deep thinkers? Or … ?
All of the big(?) t3’s responsesare simply face-saving political talk jargon of the standard self-righteous and too farmiliar kind ins’t it!
GCT had iterated during his tenure as Pm that there’s no talent in the Oppo camp. How blatantly unfair comment is that when they suppress civil society gathering now of even 1-2 person in broad diffination as unlawful per beholden civil service SPF ‘interpretations.
Freedom of expressions for the authorities but not for Our Civil Society. As even 1 person talking in public is a civil disturbing Singapore Citizen. Your rights has been canelled,
The only difference is we don’t get literally bludgent or shot to death like in Mynmmar or elsewhere. But we do have it done to us all the same in 1st World curtailment and advance technical ways aren’t we?
个人看来，虽然执政党一再强调亏损不足虑，我们是做长线投资的，但实际上淡马锡的策略与行动是投机的。为什么会言行不一致? 这显露执政党与淡马锡之间没有共识，缺乏监管下才暴露这样的矛盾。
Personally, I believe that most of GIC and Temasek’s investment decisions were good in the last thirty odd years. But when u make a mistake, u admit, u close it and u move forward. i think the issue here is people are piss off when someone make a mistake and refuse to admit. The reasons given are seemingly excuses in the eyes of the public.
I feel that singaporeans may not know how this affects them, if at all.
question:
1. how was the US$5.2Bn funded? What is the source of this funding?
2. how am i affected or will be affected?
regards
Mr Naivetto Sporeate
Actually, Temasek and GIC do not have to account to Singaporeans, because of the fact that even though they are using our CPF money, we get no claim on any extra profits because they are paying us “guaranteed” interest in the first place, which ironically, is below the RISK FREE RATE in international investments. Basically, CPF is just a tool to rip us off because they will definitely make a profit either way.
Example: You have 100,000 your CPF, government will pay u 2-4% (estimate) every year on it. They use ur money and buy 30 year bonds in the US at 5.5% p.a, which is regarded as risk free. This is just the base line scenario, with a large enough fund and proper diversification, returns of up to 8-10% over a long run is achievable.
So, bottom line is, u get ur miserable 2-4% interest and they get to keep excess as profits and can do whatever they like with it. U have no claim to their profits because of the guaranteed 2-4%. Therefore, it does not matter if they lose $$ or not, they still have to pay the Singaporeans.
■Boon Seng on Sun, 17th May 2009 1:48 pm
Personally, I believe that most of GIC and Temasek’s investment decisions were good in the last thirty odd years.
>>> Your belief based on?
——————
Home > Breaking News > Singapore > Story
May 17, 2009
TEMASEK’S PERFORMANCE
Govt takes long-term view
By Mavis Toh
THE Government takes an overall and long-term view when it comes to investments such as those made by state-owned investment vehicle Temasek Holdings, said Finance Minister Tharman Shanmugaratnam on Saturday night.
‘What matters to the Government is the overall performance,’ he said, adding that an investment should be assessed ‘over the long term’.
‘We track, engage and evaluate the performance. But we don’t just look at six months or one year,’ he said.
And over the last five years, Temasek has not underperformed but has instead ‘come out significantly ahead’ of other major investors.
—–
‘I don’t think anyone can honestly say that they’ve done badly compared with other major investors.’
The next time anyone tells you that “Temasek has outperformed most investors… it’s all there… just check it out…”, just present them with the longest term investment consideration, 33-34 years, since Temasek’s inception in 1974 and compare their performance against the benchmark SP500.
===
http://www.temasekholdings.com.sg/media_centre_information_factsheet.htm
Information Fact Sheet
Company Description
An Asia investment house, headquartered in Singapore, focused on creating and maximising long-term shareholder value as an active investor and shareholder of successful enterprises.
________________________________________
Net portfolio value
S$185 billion (US$134 billion) (as at 31 March 2008)
________________________________________
Total shareholder return since inception (1974)
18% by market value
17% by shareholder funds
http://www.temasekholdings.com.sg/pdf/TR2007%20Press%20release.pdf
Page 6 of 9
===
1974: Benchmark SP500 – 86
31 March 2008: Benchmark SP500 – 1370
Need I calculate the %return of the SP500 for you as well, Mr XXX, who claims “Temasek has outperformed most investors”?
===
Conclusion: While there are investors out there who has outperformed the SP500 benchmark since 1974, Temasek certainly is not of one of them. It would have been better to buy the SP500 index back in 1974 rather than leave the money in the hands of active Temasek’s management.
Look like another award is in order…
Hi Markettalk (2:43pm):
I am not a finance expert so I have a hard time understanding Temasek’s report, but it appears to me that Temasek has been getting an average return of about 17-18% pa over 33 years.
This will indeed be significantly better than most stock indices, which have per annum returns of about 10%.
However, I do not understand if the returns of Temasek takes into account yearly capital inflows of taxpayers’ monies, which would add up to be a significant sum.
Anyway, it is silly for us to think of Temasek as a single entity, of which we can judge its long-term performance. The people managing Temasek three decades back are very different from the people managing Temasek now. There is no reason to expect the same level of skill or performance between these different groups of people. Interestingly, the same argument holds true for our govt – brilliant in 60s-70s, ??? now.
The fact remains that under Ho Ching’s short charge, Temasek made several drastic errors, such as buying into risky Merrill Lynch (which tanked a year later), and then selling BoA at the lowest point (just before prices doubled in the recent rally).
And interestingly, Temasek is using the money from the sale to buy into the Chinese market, deep into this market rally. If this is a bear rally as many are predicting, Temasek will be doing what it does best again – buying high and selling low.
It is irresponsible of Tharman as Finance Minister to first deny that Temasek has made errors, and then defend the present Temasek based on long term performances of the “old” Temasek.
Temasek’s investment are for long-term – long-term losses.
The best job in the world is not the island caretaker under Queensland Tourism board. It is Temasek CEO! Loads of other peoples’ money to have fun with in the stock market, no need to admit mistake and apologize when making losses. Instead a medal is rewarded for the achievement!
Hi reader,
I think you are right about the annual returns of Temasek (compounded annualized returns?) beating the S&P500 around 12% returns since 1974. I wanted to edit my post but was unable to correct the mistake.
“However, I do not understand if the returns of Temasek takes into account yearly capital inflows of taxpayers’ monies, which would add up to be a significant sum.”
It wasn’t stated clearly nor explicitly in their report but I would assume temasek would take into account new inflows .
“There is no reason to expect the same level of skill or performance between these different groups of people. Interestingly, the same argument holds true for our govt – brilliant in 60s-70s, ??? now.”
They assumed the same tool that fixed past problems can be used to solve future & different issues.
“And interestingly, Temasek is using the money from the sale to buy into the Chinese market, deep into this market rally. If this is a bear rally as many are predicting, Temasek will be doing what it does best again – buying high and selling low.”
I agree buying emerging markets now is buying high. The rally in emerging markets is getting toppy and based on the same false notion of “decoupling”. America is the demand to which the emerging markets supply to. Need I say anymore? The feel good talk of “China stimulus” will turn out to be a false dawn.
“It is irresponsible of Tharman as Finance Minister to first deny that Temasek has made errors, and then defend the present Temasek based on long term performances of the “old” Temasek.”
It’s a cultural prohibition. The failure to recognize and admit mistakes is in large part responsible for China’s inablity, over its thousand year history since Qin ShiHuang to innovate and make conceptual advances beneficial to society. My advice to society is to learn to be accepting to mistakes (forget about the ancient “lose face” concept) so that we can all admit to them and move ahead.
Seems to me that many still haven’t got the amount Temasek might have lost.
US$5.9 billion = (Singapore dollars)S$8.85 BILLION
Est. max losses suffered by Temasek on its investment in Merrill Lynch which was taken over by Bank of America is
US$4.6 billion = (Singapore Dollars) S$6.9 billion
Temasek has also suffered what could be huge losses on other investments beside Shin Corp, ABC …….its overseas investment record since this new century not so good as the total return figures would suggest.
thankfully we did not paid our elites peanuts, but millions of dollars in salary and bonus… if not, they would have loss everything, instead of just 50bil now. how lucky we are, time to give them another round of awards and bonus
Walau! Still didn’t hear anything from our main stream medias regarding Temasek loses! We have to hear it from 3rd party! Really 0 credibility huh?
Luckily Ho Ching resign already. Otherwise all Singaporeans will be calling for her blood! Imagine that! That will be so embarrassing for the govt!!
*Achievement Unlocked – 1000G – Lost 4.9BIllion in a single investment*
*Trophy Awarded*
Ironic,
I think they have to be answerable. If the government pays you 2-4% risk free rate. But invests in more risky assets paying 8-10%, aren’t you concerned that with the credit risk involved?
By investing in higher risk assets, you may never even get your full principal back from the government. Of course being a sovereign entity, they can always print more money so that they do not default on the repayment of your CPF moneys. But this will inevitably destroy the Singapore dollar.
This makes them answerable either way. Sounds like a toxic asset backed security with “clever” accounting to me.
And then Ching! The point is how much gain and how lost during her majesty of the unique famiLEE as proponent by last PM GCT before she even became Temaseak ED. And misteriously then as CEO when GCT as well as Chairman Dana also said conflict of interests due to hubby’s DPm & Finance Ministry Hubs!
So where’s Tharmam’s Balance sheet for Temasek or do we still have to wait for the regular yearly Report Card to know the truth for billions vamoose?
No admission of guuilt even from non-liberate mistakes is a sign of what guys? GCT, Dana, Ho, MM, Tharman, PM – you still wanna entrust them with your life – for their long term of it?
Oh Blimey as they say in “Mind Your Language” and in UK!
For their long term ‘investment’ of it (you life!) I mean?
And read TODAY paper’s Voices, Gavin Lee’s better and more boldly civic letter on WKS’s having the final say on the AWARE & religiom saga. It is indeed feedstock for inviting govt to be less timidly kiasu and just looking smart now. None as great as The Old Guards like Dr. Goh Keng, Hon Hsui Sen, Dr. Toh Ching Chye, Ong Pang Boon to name a few. Even MM is even by this latest singapore govt kiasu-flu.
any relative safe investments (capital guaranteed) would get u at least 7% on average over 20-30 years with a diversified portfoilio, yet they are paying u 2-4%, while holding ur money till u’re 65 years old, talk about extra profits!
Just look at how they made 17% since 1970s, and their rate on CPF was like 2.5% till a few years ago. The 10%++ went into their own pockets, dividends, bonus.
Aren’t their purpose supposed to be taking care of singaporean’s retirement? how come they are skimming so much off our retirement fund instead, and the problem here is that there is no choice, u’re forced to keep ur CPF with them.
Ho Ching should have been fired for following reasons:
1/ Failed to carry out her duty to protect Spore wealth.
2/ Failed to make sounds investment decisions.
3/ Failed to put in place a risk mangement mitigation process within the organization.
4/ Failed to explain the losses and conflicting investment direction.
5/ Failed to fired her staff who failed to delivered.
6/ Since the salary are peg to the public sectors, by standard and practices, she is fired!
Any one of the above by private sector standard would have her being fired!
Wallflower,
Well, i was just making a point, they are not answerable to anyone because of the fact that singaporeans were guaranteed principal + interest no matter what happens. U need to be clear with the issues here.
The 2nd issue would be, they are basically underpaying Singaporeans with the guaranteed principal + interest =/. We can’t really have a say in what they do UNLESS we rectify this first issue.
Those who knows investments know that 8-10% returns are basically risk free if diversified over a period of 20-30 years, paying 2-4% interest is a blatant rip off. The reason how they can achieve this is by pegging banks’ cash rate at really low levels, the upside to this is that housing loans are cheaper, but because of this difference, there is arbitrage when investing overseas, where the returns are much much higher than in singapore.
Singapore is the only country with a lifespan on cars and housing, everything goes back to the government, 10 years for cars (unless u pay xtra tax) or 99 years for some flats.
goldman added bank of america to their buy list.
Ironic,
I don’t think you understand my point. Wouldn’t you be mad if you had bought a lower yielding high grade security and found out that the issuer decided to reinvest the money in junk bonds? Meanwhile you still earn your measly return while the credit on the paper you are holding has turned to junk. Same principle.
Ironic, the only way you can be guaranteed your 2-4% is because it is backed by the full power of the Singapore government to print more money. If they do indeed do that to cover the shortfall from investment losses, the Singapore dollar is taking a ride down to hell. Either way, you lose… still think they don’t have to be answerable?
Not only did Temasek liquidated its Bank of America (Merrill Lynch) at US$7 per share average but it has also sold off ALL its holding of ICICI Bank shares listed in America in the form of ADRs.
So confirm loss from buying into Merrill Lynch shares is US$4.6 billion
Currently ICICI shares are up nearly 30% today following the Congress Party win in the Indian GE.
Our local newspapers talked about Temasek reducing its investments in US/Europe but increasing its holdings in Asia.
ICICI is apparently India’s largest non-State own bank.
Hi Ironic and Wallflower,
I believe you both actually have similar views, just that the perspectives used are slightly different.
Both of you feel that CPF is a rip-off because the interest rates offered under this forced scheme are too low. Our CPF money are invested in higher-yielding investments elsewhere, and the difference is pocketed if there are profits. If there are losses, there are always options available for CPF, like printing money or delaying withdrawal or shifting losses to Temasek. In other words, heads they win tails we lose. Both of you would agree on this I believe.
But will the CPF system ever change? I honestly don’t know what our opposition parties are doing as they like to only appear just before elections. They do not seem to have any detailed manifesto, or burning desire to fundamentally change the flawed systems. In the US, political parties fight for votes by debating over economic measures or law changes they wish to enact. Over here I do not see these.
Every election, the opposition gets whacked upside down but I do not see them trying to unite or form a coalition to share resources. If I see any more three-way fights in the coming elections, then all I can say is the opposition f***ing deserves to lose.
So all we can do now is to employ TSM to pray for a miracle for us. Until the day our opposition becomes more politically mature, we will never see any changes in our CPF system.
Wallflower,
I am just following the rule of law. The CPF is basically a contract, u being assured 2-4% returns while they get to do what they want with ur money. The money came from us, singaporeans, but we have no say in it, UNLESS Temasek and GIC are acting in a way that is uncooperative, hence, breaching the implied condition in every contract by the law of equity which would allow the contract to be discharged.
Scenarios of that could be when Temasek TOTALLY screws up with their investment over a long period of time, leaving behind a fund that is less than the principal capital promised to singaporeans and they have to resort to printing (inflate) money for repayment.
As long as they are in the GREEN (enough to cover the principal promised), which means these losses were losses to their profits only, Temasek does not have to account for it Singaporeans because they are a PRIVATE (yes, private) wealth fund.
Of course, there’s a moral obligation to the citizens since we were required by law to contribute part of our salary for retirement planning. However, there will only be a case of it when they cannot deliver the guaranteed 2-4% and forced to print.
RE: reader,
Yea, i agree with you. However, i’m not looking forward to any radical changes, however i wish the government would do something to cushion the population from economic hardship, there’s not much fiscal policies going on, resulting in our GDP declining so rapidly. The measures they implemented are so so weak, its kind of disheartening to see it. Worse of all, they spent so much money going into the US financial markets while they could have used the 4.6billion lessening the impact of this recession.
Every time i see some old lady or man collecting cardboards, used cans, my heart hurts to see such things and i’ll always wonder, why can’t we do something for them as a country?
Temasek Sells BofA Stake; Takes A $4.6 Billion Hit
May 15, 2009:
By Costas Paris
Of DOW JONES NEWSWIRES
SINGAPORE -(Dow Jones)- Singapore’s Temasek Holdings Pte Ltd. sold its entire 3.8% stake in Bank of America Corp. (BAC) between January and March this year, swelling its losses from soured investments by about $4.6 billion.
Temasek, a state-owned investment company, disclosed the stake sale in a quarterly report filed with the U.S. Securities and Exchange Commission.
A Temasek spokeswoman confirmed the Bank of America divestment, but didn’t give any other details.
According to people familiar with the situation, Temasek sold the Bank of America shares for an average $7 a share, netting $1.3 billion.
Temasek made some high-profile investments in the past two years, including in Merrill Lynch and in Barclays PLC, in which it increased its stake in June 2008 to a little over 2% paying about $399 million.
Many investments have turned sour with the financial crisis battering share prices and asset values.
Temasek’s investment portfolio fell 31%, or S$58 billion, to S$127 billion in the eight-month period ended Nov. 30, Singapore’s Senior Minister of State for Finance Lim Hwee Hua said earlier this year.
The investment firm bought a 14% stake in Merrill in stages starting from December 2007, paying $5.9 billion in total. At that time, it described the purchase as a long-term investment.
When Bank of America acquired Merrill in January, that stake was converted into 189 million Bank of America shares.
Temasek was not informed of the merger talks between Merrill and Bank of America and “never wanted to be a Bank of America investor,” a person familiar with the situation said. “Very early in the year, the plan was set in motion to divest the holding,” this person said.
A second person close to the situation said: “(There was) little potential in Bank of America shares. If one sees the results of the stress tests in the U.S. and analysts’ reports on Bank of America, the picture is not bright.”
The results of the stress tests, during which U.S. regulators scrutinized 19 financial firms, were released last week and Bank of America was asked to raise $33.9 billion in common equity.
Shares of Bank of America traded between $2.53 and $14.81 between Jan. 1 and March 31. They closed at $11.31 Thursday.
“Temasek sold between the high and low of Bank of America shares during the first quarter,” thesecond person said.
Despite the losses from the Merrill investment, Temasek continues to be an active investor in the market, the people said.
This year, the state investor has been active in Asia, participating in various rights offers by firms like DBS Group Holdings Ltd. and Chartered Semiconductor Manufacturing Ltd., in which it holds 28% and 62.33% respectively, and by Bank Danamon, a mid-sized Indonesian bank.
According to Thursday’s SEC filing, Temasek also sold its entire holding of American Depositary Receipts of ICICI Bank Ltd. (532174.BY), India’s largest non-state-owned bank by assets.
Temasek held 3.6 million ADRs in December, according to a previous SEC filing for the quarter ended Dec. 31.
1. Head Hunted!
2. Highly Championed and Recommended!
3. Superbly Trusted!
4. Uniquely Paid High!
5. Despite Disparity between Fit and Form!
6. Despite also Disparity between Form and Function!
7. Inspite of preceding Items 5 & 6 Job and Highly and Openly Revered but Square Peg Fit into a Round-Hole Job-Requirement need, Job and potential Incumbant are “Mated” anyway. As they have been Packaged like in Corporate America where, “If there’s No Market, CREATE THE Market by HOOK or by CROOK”!
8. So while it works out well, see what talents we have? And of cource it automatically includes ALL of the Champions of the Proposers AND the Proponents of that Incumbant!
9. But when it fails and with Rewards paid and given, Proposers AND Proponents ALL Go Into HIDING! Then Other Mascots come out in Absolute “Ultruistic” Masquerade Defense with their ‘incognito’ Official Capacities to SPIN and DRY Clean ALL the Fast ‘Stains’ Away without ever using stain removers nor detergents!
10. And so,”Taming the Tongues” of self-style, highly revered to be highly paid Better Than our 1st-World Class Nation Status
is a Politically GIVEN THING.
Where then is the irresponsibility, the incompetent carnage of our SWF invested in more Volatile Stocks? We do long terms. We did Averaging. We had group decisions before ‘plunging’ into the “What WAS Known At The Time”.
Question is “What DID They really KNOW” isn’t it? OR more Likely “Didn’t Know Then”. But ACTUALLY “Couldn’t have Known then”. Oh yah there were INDICATORS Ah. But there weren’t any Firm and Solid evidence plus things could go either way. Who could have known Lah!
Is it jEzzz Like Wall Street? Ot Ain’t it? Why are we Lesser- Mortals are really quite stupid writing these innuendos right?
Lastly, why are WE so Insufferable having been so well taken care of BY US for more than 40 years. Thanks fot the education mate. We have learned to be like ‘COY’ though you are NOT!
Hi Ironic,
I agree it’s a sad sight to see old people homeless or picking cardboard. It won’t cost much to provide food or basic medical care for them, but social security is a taboo word here.
On the topic of CPF, it has its merits but I feel it does need some radical changes.
Firstly, the returns of 2.5 – 4.0% are simply inadequate for retirement. Especially since parts are it are locked in Medisave or used for housing.
Secondly, the forced saving effectively reduces our income by about a third. This has the insidious effect of reducing our disposable income and thus spending. Is it no wonder then that our domestic market is not good enough to support our economy?
Thirdly, the usage of CPF for housing effectively increases credit, causing housing prices to grow sky high. People end up spending too much on housing, ending up asset rich but cash poor at retirement.
Thus I believe the problems with CPF are not just those of fairness or accountability.
Ironic,
I agree with you on the interpretation of the law. But the laws are naturally written for the benefit of the people managing transactions that are not done at arms length. The fundamental problem in this specific issue and any other in this country is always the lack of transparency and accountability.
Without transparency, the trustee of the CPF has the autonomy to lend money at rates beneficial to Temasek and GIC at the expense of CPF account holders like you and me getting the short end of the stick. They (Temasek and GIC) can then reinvest these cheap funds in riskier assets for a higher return to their own benefit without having to reward CPF account holders for the increased risk from the degradation in credit of the debt issuance.
Assuming the CPF becomes underfunded, the government can then simply print more dollars (given that the CPF is guaranteed by the government) and blame it on problems in the global economy (would not be entirely wrong but still a half truth) given the lack of transparency and accountability. Ultimately, retirees with their fixed income from CPF withdrawals get screwed by inflation.
It’s all just a cesspit of incestuous relationships between the PAP, Temasek, GIC and CPF trustees. Take away the opaqueness, lack of accountability and add in a credible AND questioning opposition, some (though not all) of these problems might actually be resolved in a self-correcting government and Singapore might even be a better place to live in the future.
An interesting article on GIC, Temasek and CPF.
http://sahathevan.blogspot.com/2009/03/singapore-gic-and-temasek-losses.html
Incidentally, Temasek has raised US$1.75 billion from a 10-year inaugural bond issue with an annual rate of 4.5% in September 2005 (US 10y treasuries were trading at 4.25% while similarly rated AAA corporates were trading at 5.25%). The Temasek bonds were fully taken up by investors. There are no released figures. But I’m sure the CPF had to do its part in national service sucking up an excess supply to keep the coupon low for Temasek.
Reader,
Yea, the CPF is just one big xxx, its just that people who are ignorant of finance would think 2-4% is a decent deal for them. I agree with your other views as well, hopefully something changes in the future.
Some of you might think of minibonds, notes linked to Lehman were paying 5% and then they ended up losing more than 75% of their capital. The reason for this was that, minibonds and those notes were NEVER SAFE to begin with, they should be paying 15-20% interest on these notes, but somehow there was NO REGULATION and DBS was allowed to sell this to retirees, old people under the guise of “very safe”. Our government still did NOTHING in this day, whereas the Hong Kong government already forced their banks to compensate their people for the scam. As long as u’re old and ignorant of finance and the banker did not explicitly tell you that there is a chance u WILL lose ur capital in an adverse event, its tantamount to unconscionable dealing.
Wallflower,
Yea, pretty much, the only way we can change this CPF mismanagement is by changing the way CPF works, this so called guaranteed 2-4% interest rates removes all our right to have a say and a call for transparency and accountability.
A similar scenario would be, assuming we have no Temasek, GIC, everyone is forced to put part of their salary into a fixed deposit with DBS and then some day u saw DBS making a 3 billion loss. Would the outrage be less than what its happening now?
TECHNICALLY, Temasek is a private independent fund managing company who is not affiliated nor controlled by the government, hence, they do not have the ability to print funds, so its pretty much the same concept with DBS.
Admin,
I would like to retract back my statement that “CPF is a one big scam” from my above post, the reason being that upon thinking back, it might be too strongly worded and thus a slight intention of defamation.
My views on CPF is basically that we do not have much of a choice in choosing the policy structure. I just feel that the way CPF works right now could be further tweaked to the benefit of all Singaporeans especially if Temasek annual returns are 17% over the years. Thats why i would like to see some changes. Thats all.
Thanks.
You both seem to be from the financial sector. And is good that we get relevant knowledgeable people for any WP blogs. It’ll bring in more interest and up the stake in substantial and substantiated response.
That said, I sincerely hope that WP will garner courage in valour to review appropriately.
So, just for illustration. Once 2 guys were discussing about the inside of a mansion in the East end. One said it’s beautiful inside. The other refuted that it isn’t, in fact even ugly in some rooms! So I asked, I’ve not even seen the outside of it, shall we go there and find out.
When we arrived, some windows were open. So I asked if they have been inside. NO! Both replied emphetically and with immediacy. Had no choice but to ask how then do you both know it is either way as you both said in opposing views? Oh, we postulate about the insides from it’s external looks – AND it works. How many then have you both seen and this way works? OH, this is just our 2nd house you see!
My goodness,subjective verbal without any consideration about so many variations in personal tastes, perviews, knowledge about beauty and beast, form, function and cultural, ethnic architectures bla bla! This is what I hope for WP NOT TO BE! And thus why I write thin this like manner.
I sure there’s more knowledgeable people about these issues out there reading our discussions as well. Hopefully they will participate and all of these can serve as an avenue others know more in depth knowledge as well as understanding the different viewpoints.
Lee Kuan Yew is a coward. Ho Ching is mediocre. Lee Hsien Loong longs to be somewhere else. Singapore is a plain, pock marked peasant girl dressed up like a whore and the Lees are her pimps.