Nor did it reveal the total size of GIC’s portfolio, other than saying it was over US$100 billion. Morgan Stanley estimated it to be closer to US$300 billion before the recent global markets meltdown.
TODAY, on size of GIC’s funds.
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No wonder they have to raise GST and dip more into the reserves, using the excuse that it is to help the poor. Now it all makes sense.
Morgan Stanley seems to know GIC better than Singaporeans themselves, what’s this?
Wow! If this is remotely true, my investments are outperforming GIC’s by a huge margin!
GS, good for you.
However you need to recognise that there will be people who individually will do better than certain funds precisely because of the higher risk appetite the individual takes vis a vis what the fund takes.
Higher risk, higher return. Lower risk, lower return.
The GIC has a different risk appetite and not surprising. If one manages a few $b, one doesn’t “play” the stock market nor can/will they.
As for Morgan Stanley knowing some, it won’t be surprising. The trades undertaken through them or advisory provided by the financial advisers will indicate to them how large the organisation is.
Having said that, wasn’t Merrill Lynch the adviser to Temasek on the Shin Corp deal? No wonder they ended up the way they did.
today is surprisingly honest – maybe they’ll call this esther fung in for a chat.
Power of the internet and market globalization is that news travel in lightning speed (round the clock).
Does anyone realize why GIC suddenly published its return (as at March 2008) and bowed to be more transparent? The larger financial tsunami in wall-street happens just weeks ago. So I sort of expect the next time we hear from GIC is that, the returns earned has been completely wiped off with some lost investments. It’s the fact of the Investment. You win some, you loose some.
If anyone who had watched the US congressional hearing last night will have a feel of the magnitude of the financial tsunami crisis. Whether the US bail-out plan is successful or not, the impact felt now is just a tip of the iceberg. We will probably hear more institutions failing through-out Asia (given the fact that the market are so inter-twined).
At odd is that GIC had also commented that they expressed interest to further invest in Morgan Stanley if ask. Being the third largest SWF country as indicated implies the size of the funds GIC is managing (well “OVER 100Bln” as disclosed but more likely is several hundred blns, after 101 or 300 or 500 is well OVER 100Bln right?). Whether this is proving to be right strategy at a crisis time, where fire sale assets are abudance “if and only if the pick is right” to reap profit in years to come). Politically speaking (if there any political implication), it is the right thing to do.
Guys, braised ourselves and hope that we get to keep our job when the smokes are cleared. I already have friends who suddenly lost not only their life savings but lost their jobs. The crisis facing us now is uncomprehensivable not even with the savvy investors. In short, it has gone way out of hands and it is like fighting wild jungle fire under a force 5 hurricane.
/// 4) lim on September 24th, 2008 11.56 am
Higher risk, higher return. Lower risk, lower return.
The GIC has a different risk appetite and not surprising. If one manages a few $b, one doesn’t “play” the stock market nor can/will they. ///
Lim – yes higher risk, higher return. However, the supreme irony is that GIC has transformed itself from a risk-adverse to a more risk-taking appetite in recent years. From holding 75% of its portfolio in bonds 25 years ago, it is now reduced to 26% in bonds. That means it has gone aggressively into the more risky equities, private equities and real estate, and into the more risky developing markets instead of developed markets. Yet the returns are getting worse.
If you look at the annualised rolling 20-year rate of the return, for the nominal rate of return to fall quite substantially from 2005 to 2008, it will mean the returns in those 3 years are pretty bad to manage to bring down the 20-year rolling rate.
In this case, higher risk had brought about lower returns in recent years…
I think there are just 3 messages they are trying to bring across:
1. Yes they are a SWF and along the calls for greater transparency, this PR exercise will give a better impression of them and hopefully make it easier for them to invest globally. Look at friendly pictures and not much data. LHL almost laughing …hahahahaha
2. To appease the dumb Singaporeans and allow the MSM to keep mentioning the 4.5% return (5.% in Sgd terms) and allow them to compare to the dismal savings rate. Pssst the peasant doesn’t know the difference between Risk, Return and Benchmarks.. Does the accounts state a benchmark return?
3. Last 20 years of profitability – proven track record lah… so if next year(or a few), losses start to show(should take a miracle now)… they’ll say… aiyah didnt I show you how good we’ve been for the past 20 years, Trust ME. The long term la.. wait another 20 years and I will show you another report?
/// so if next year(or a few), losses start to show(should take a miracle now)… ///
No, it wouldn’t show at all as they are using 20-year rolling rate of returns. It will take, say, about 10 years of continuous losses to bring this rate under water…
1 minute $300billion, then $200billion, then now over a $100billion only and then what’s next?
TOC and all,
I think we should not be so sceptical about the portfolio size. If you read Morgan’s Stanley language carefully, it says something like “GIC is ESTIMATED to CONTROL assets worth ABOUT US$300 billion”.
Note the words in CAPS. It is an estimate. If Morgan Stanley have over-estimated, I don’t think GIC will come out and correct them, otherwise, it begs the next question – what is the actual size? Also, the KEY word is control. A fund manager can control a company if it has a major stake or majority stake. Any stake over 20% or 25% can give effective control. So, say, you own 30% of CorpG and the the market cap of CorpG is US$100bn. You have only this stock in your portfolio. Your portfolio asset value is therefore US$30bn, but you are effectively controlling assets of US$100bn as the whole of CorpG is now effectively under your control. Now, of course GIC is on record as saying they are in this business for returns, and not political or other controls.
And finally, GIC again had been consistently saying for so many years now that its portfolio size is “OVER” US$100bn. This affords it a great deal of opaqeness and flexibility. Isn’t US$300bn also “over US$100bn”? Over US$100bn can mean US$101bn, US$200bn, US$300bn, US$800bn or any figure you care to pick as long as it is one dollar higher than US$100bn.