Leong Sze Hian / Columnist
In the annals of investment history, perhaps never has so much been lost in so short a time!
Will Singaporeans ever forget when they woke up on May 16 to discover that – “Temasek sells BoA stake: Move in line with fund’s new strategy, but it may have lost at least US$2.b” (Straits Times, May 16)?
It states that:
“Singapore’s state-owned investment vehicle Temasek Holdings sold all its Bank of America (BoA) shares in the first three months of this year, resulting in estimated losses of between US$2.3 billion (S$3.4 billion) and US$4.6 billion”.
In the annals of media history, perhaps never has so little been said in so many words, as in Temasek’s letter to all the newspapers, clarifying its BoA loss!
From the ST letter:
“I refer to recent reports and commentaries on Temasek’s divestment of its Bank of America (BoA) stake. We would like to clarify some of the points raised.
Temasek invests with the objective of delivering sustainable returns over the long term. This means our investment strategy is not aimed at delivering target returns on a year-by-year basis. This is why we report our portfolio returns not just for a single year, but for various time horizons in our annual Temasek Review.”
Everybody (without exception) reports portfolio returns for various time periods. So, to give the reason that different period returns are reported because Temasek seeks long term sustainable returns instead of on a year-to-year basis is really “nonsense”. I’m sorry I can’t find any other suitable word to describe this. It does not answer any questions about the BoA loss.
By the way, why is it that Temasek and Parliament keep reporting its performance over different selective time horizons? Its reporting should be consistent every year – 1, 3, 5, 10, 20, 30 years, and from inception.
Next:
“Our investment in Merrill Lynch was made in December 2007. This was exchanged into BoA shares in January this year following BoA’s completion of its September 2008 offer to buy Merrill. Our investment thesis had changed from Merrill’s specific businesses to the more diversified BoA linkage to the broader US economy. The risk-return environment had also changed substantially. We decided to divest our BoA stake after considering all relevant factors.”
What exactly were the relevant factors considered? These are not elaborated on at all. What is clear to the public is that Temasek bought BoA at almost the worst time, sold them at the worst time – this may go down in history as the all-time classic example of buy high, sell low!
For a loss of such a magnitude, who were the people who approved, gave consent and knew about the sale?
Further in the letter:
“This move to balance risks against opportunities is part and parcel of our discipline of investing and divesting to deliver sustainable long-term returns on our entire portfolio.”
Aside from the BoA’s loss, Temasek’s last reported disclosure that its net portfolio value dropped in value from $185 billion to $127 billion from March 31 to November 30 last year, a fall of 31 per cent. The public needs to ask: what is the value now after adjusting for any injections from the Government and the valuation (pre and post transfer) of state assets transferred to Temasek?
Finally:
“We are mindful of the risks we face as we invest. We reinforce this risk-return balance through a compensation framework which puts the institution above the individual, emphasises long term over short term, and aligns employee and shareholder interests for both the upside and downside, over the medium and long term.”
It is bad enough to lose so much of Singaporeans’ money in such a short time, but I think it may be akin to “rubbing salt into the wound” when Temasek declines to reveal the actual amount lost.
Can any government in the world that loses a few billion dollars be able to escape accountability and transparency as to how much was lost?
This is not the first time that Temasek has lost so much money.
Isn’t it about time that an accounting of all its losses be disclosed to Singaporeans?
How can Temasek say that employee and shareholder (Singaporeans) interests be aligned, when Singaporeans are still being kept in the dark when even our Finance Minister said in response to the BoA loss, that they do not question the day-to-day investments of Temasek?
As I said in my interview with Reuters (Singapore’s Temasek defends costly Bank of America exit, May 24), “The letter doesn’t give the answer that everybody is asking: How much did they lose?”
Strange definition of long term view
Singaporeans were told recently, and repeatedly, in the first few months of this year that investments in U.S. Banks were long term and would recover.
Since Temasek sold all its BoA shares in the first three months of this year, were not the “investing for the long term” statements, somewhat irresponsible?
As to “outgoing CEO Ho Ching reiterated this week that the investment fund takes a long-term view, at least 10 years and up to 50 years”, this must arguably be the understatement of the century!
Such remarks beg the question as to the competence of its outgoing CEO.
Does or does she not know what’s going on?
To put the amount of US$2.3 billion (S$3.4 billion) to US$4.6 billion (S$6.8 billion) in perspective, it is about two to four times the last two per cent GST increase to help the poor!
——–
45) Peter Seller
“…On a separate note, imagine a junior to middle ranking officer of an investment bank informing his super officer that he had just lost the bank between 2 and 4% of its net worth in a single trade. Do you think he would hold his job beyond 5:00 pm that afternoon??…”
Depends who that person is. In SGP context, at 2D losses, may even be upheld for “courage to …. differ” and given a platinium award somehow. Why u think we need 2 IRs urgently — what better way to study the effects of gambling with chunks of money. Arrg!, I’m wasting my time again…
1 Sickest PAP Political Joke of the Millenium (not just Century):
To promote Singapore as Financial/Business Hub as well as “Good CORPORATE Governance”, her former Finance Minister hubby had constantly preached “transparency and accountability; level playing field; checks and balances; encouraging whistle-blowers to report mismanagement; blah,blah,blah…”
BUT apparently all these talk does not apply to his lovey-dovey wifey !!!!!
2 Biggest Tragedy for SINGAPORE (the Nation) and SINGAPOREANS (the People):
As to the long-overdue and sorely-needed “CHECKS and BALANCES” in Good POLITICAL Governance, the “cunningly-clever” [ NOT "competently-clever" ] PAP Govt has chosen to interpret this as “big fat payCHECKS and big fat personal bank BALANCES” !!!!!!!
3 Our parents were “British Subjects” who have to sing “GOD SAVE THE QUEEN”.
ALAS, as Singapore Citizens (who have completed National Service), we now have to sing “GOD SAVE SINGAPORE” !!!
Hold back our min. CPF sum for investment making retiree poorer and yet lost them. Might as well don’t hold back and give us the money for us to invest.
Errata & apologies for quoting wrong figures in 35) :
President’s second key was for 4.9B.
TH reported losses till last Nov was from 185B to 127B, meaning about 60B negative.
aiyoyo
$60B, how many SPURS can be supported?
how many jobs can be supported?
how many households can be supported? etc. etc.
aiyoyo
52) DavidSeeLeongKit ,
not only that, i see we are joke of world among all in political arena uniquely super. flawless, 100% PAPs, one man show, highest vote nos 81-2 ratio,
and the one and only FATHER, SON AND THE HOCHING GANG………..WOW!!!
Another case of “Privatise profit and socialise losses”?
These monies can be used to build North-South Expressway IMMEDIATELY ( yes, we don’t need to wait for year 2020 for congestion to worse further before something is done ) to alleviate congestion on road which can reduce the EPR road toll, improve public transport, more subsidise for Next-generation Broadband Network to lower the stubbornly high price of broadband by ISP (which Temasek or GIC has stake in), increase research grant, set up more schools and nurseries.
Yes, the government is doing these but more can be done to increase employment and build up Singapore infrasturcture for the next rise in market when recovery comes .
Not to mention negative return of investment that has incurred and loss in cost of opportunities if these money is deployed for other attractive investment at current market.
The govt will never admit nor apolgise in their failures. They will find s’thing glorious to publicise to cover for their mistakes. These has been happening for the last few decades so don’t expect any changes from this present team of govt.
In regards to the cpf monies, I bet that they will table a motion to further change the retirement age again, thereby delaying any payment to the citizens. Let face it, if PAP loses the next GE, S’pore will be in political turmoil ( not to mention financial turmoil ) and if they continue to win, we the citizens will still have these group of so-called elites who don’t understand the sufferings of the people, running the country. Either way, we lost.
In today’s scenario the average HDB BTO / ReSALE 4R & 5R Flats average between $400,000/- and $500,000/- respectively and in 4 yrs time i.e. July,2103 the min. sum in your CPF must be $120,000/-
Now how to make ends meet if you are starting life or to retire in 4 to 5 yrs. time?
so what quality of life are we talking when our children can’t even make ends meet……….
The title “Temasek: Lose so much, tell so little?” says a lot. In addition, this Temasek issue looks like one where parties at the ‘spotlights,’ want it to blow away as soon as possible, but the public just kept digging and digging by now.
Over time, this gets worse because lots of digging happen online, and we all know how the internet works : it’s near timeless, and such records will only grow, not diminish.
‘Investment Thesis’.I Iike the words but what the hell does it mean,Myrna?
[#59 RecessionBlues]
Good observation. And I am with you.
Some years ago, someone wrote an article criticizing our govt as the greatest culprit for fueling the inflationary costs of living in Singapore and he provided reasons for his critique. When I first read it I thought to myself : how right you are, mister.
And my own opinion of the govt has not changed. The govt is still the No 1 culprit for the high costs of living in Singapore and many people are finding it difficult to make ends meet. Just step into a Kopitiam foodcourt and one can see how inflated food prices have become.
Govt ministers and other high wage earners are of course completely unaffected. If you are paid by the millions you would not be affected by high food prices or high property costs. Such things may even seem as peanuts to you.
Living essentials may be peanuts to people who earn millions but other people are finding it increasingly difficult even to acquire peanuts.
This govt has been f&#@ing blind in so many areas. Singapore desperately needs a change in govt policies, or better still, a new political party to helm the govt.
Please cast your vote wisely in the next elections. rgds
Finally, some news on the radio this morning scrutinizing temasak & gic over severe investments losses
63) toiletmatter on May 26th, 2009 10.59 pm – “Finally, some news on the radio this morning scrutinizing temasak & gic over severe investments losses”
With the MSM also part of the lie weaving machine, further excuses will surely be forwarded such as longer term horizon outlook, loss is temporary setback, the new team will ensure renewal blah blah blah …. typical hallmark of the ruling regime to just gloss over the mistakes they committed.
My money and it’s Gone ?
I was thinking.Maybe TH sell BOA to GIC.
Then all will be carpet under GIC exceptional gain
Why Temask sold BoA shares
It is conventional wisdom that banks with littele emerging mkt exposure will underperform
” there seems to be broad consensus among industry observers that average returns on equity through the economic cycle will be in the low- to mid-teens henceforth, well down on the 20%-plus achieved before the current crisis.
Another way of looking at the industry is to compare its growth with GDP growth. In emerging markets, the industry should still be able to grow faster than GDP as the use of financial products spreads. In mature markets, with the turbo-boost of leverage gone and bank balance-sheets still to be slimmed, a growth rate in line with GDP is probably as much as can be hoped for.”
Economist
“Our investment thesis”
Where can we read your world-class thesis ? Since the government is funding the thesis, why can’t the thesis available publicly ? So is the title of your thesis “How to bankrupt a country using the strategy of Buy high and sell low” ?
I think that CPF Min. sum in 2013 will be $120,000/-
But first we must cross 2012 End of Mayan Calendar
So why worry?………….Be happy NOW!
UNIQUELY SINGAPORE Political Jokes
SG = Screwed-up Gabra-men [not Singapore Government]
BUG = Bloody Useless Government (also, a disgusting Political Pest)
WKS = Won’t Kena Sacked
[not the $3m DPM Wong Kan Seng behind Mas Selamat Great Escape Fiasco]
SARS = Shameful Abdication of Responsibility Syndrome
[even more deadly than the disease of same name]
NTUC = Never Trust a Union Chief
[especially a PAP appointee eg $2m Minister Lim Swee Say]
PAP (in Malay) = “Papa Anak Parti” [Father and Son Party]
PAP (in Cantonese) = “Phui And Phui” [spitting twice in disgust]
PAP (in Hokkien) = “Pien Ah Pek” [bullshit the Old Folks they can live till 85, hence no need to withdraw their CPF retirement savings so soon --- thus ensuring more supply of cheap funds for GIC/Temasek to "play tikam tikam" with the People's hard-earned monies]
MSG = Money-Sucking Government [not MonoSodium Glutamate]
MM = Million-dollar Minister [not Minister Mentor]
PAP = Pay And Pay
PUB = Pay Until Bankrupt
HDB = High Debt Bankrupt
[bloody hell, HDB new/resale flats so bloody costly ---
no thanks to that bloody $2m Minister Mah Bow Tan]
MBT = Minister who Bull-shit in Tampines ward
[for saying HDB flats are "heavily subsidized"]
GST = Got Screwed Thoroughly (by the PAP after voting for the PAP)
GST = “Gasak Sampai Teruk” [in Malay, Pay And Pay until drop dead]
COE = “See Hor Yee” [in Hokkien, Pay And Pay until die standing]
ERP = Everyday Rob People
MRT = More Ridiculous Taxes
> PAP say: Pay Peanuts, and you will get Corrupt Monkeys!
S’poreans say: Pay Big Bananas, but still get Incompetent Chimpanzees!!!
> Favourite pop song of:
The Father: “MY WAY” by Frank Sinatra
The Son: “MONEY, MONEY, MONEY” by ABBA
> “Never in the history of mankind has so many Singaporeans been milked for so much monies over so many years by the PAP Government!”
[with apologies to Sir Winston Churchill]
> SINGAPORE is a supposedly-democratic little red dot nation of:
self-proclaimed “First-World” obscenely-paid Million-dollar Ministers and
self-proclaimed “First-Class” over-paid Bird-Brained Bureaucrats
— not to mention obscenely-priced “pigeon-holes” (private condos) and over-priced “bee-hives” (HDB flats).
70) DavidSeeLeongKit on May 27th, 2009 11.34 am ,
bro, you are damn right!!
good one!!
When you pay tope salaries – you expect top performance and if that is not coming – you simply remove the individuals . This has been the case with croporate world. We ahve a a situation where we pay top corporate salaries with no requirements for performance and no accountability . If this is not corrected, we will breed a class of highly overpaid but very mediocre politicians – our fate is sealed .
How much is S$5B loss ?
It is roughly
1) The original North-South, East West MRT network, each has 26 MRT stations
2) Says, 5 Sport Stadium Hub
3) 10,000 old folks home with 500 bed each ?
4) 1,322 months, 0r 110 years of our PM salary
5) How many A380 SIA can buy ?
6) 3,000 HDB block to add with 2 new lifts without charge to residents
All this just vaporized in 7 months, how sad, will Temasek do the same if this is thier own pocket money ?
WHERE IS THE ACCOUNTABILITY ???
I was wondering what will happen if any opposition members were to create such a mistake? I am sure it will be definitely be drastic & dramatic & loads of firing!!!
#70
Too many Abbreviations (Stressed out) can cause SDS-Sudden Death Syndromes too.
Any idea on RECESSION Index here?
Re{
67) A Tan on May 27th, 2009 8.07 am
Why Temask sold BoA shares
It is conventional wisdom that banks with littele emerging mkt exposure will underperform
” there seems to be broad consensus among industry observers that average returns on equity through the economic cycle will be in the low- to mid-teens henceforth, well down on the 20%-plus achieved before the current crisis.
Another way of looking at the industry is to compare its growth with GDP growth. In emerging markets, the industry should still be able to grow faster than GDP as the use of financial products spreads. In mature markets, with the turbo-boost of leverage gone and bank balance-sheets still to be slimmed, a growth rate in line with GDP is probably as much as can be hoped for.”
Economist
————-
“Emerging markets”, so says the Economist.
Is India not an emerging market?
Yet Temasek also sold its entire stake of 3.6 million ADS of India’s largest listed bank, ICICI which is also listed on the New York Stock Exchange, as mentioned in the Dow Jones report which also mentioned that Temasek sold its Bank of America shares at an average price of US$7 per BOA shares with a total loss of US$4.6 BILLION which is equivalent to about S$6.9 BILLION.
#59) RecessionBlues– well said, after 12years, I still owes S$170K. I took a loan of S$210k . When I ask the officer., pls explain? it must be interest lor. I still got 13 more years to pays my instaLment.. Now I cannot sell, I need to put aside S$106k in CPF and S$170k outstanding loan. Tell me how to get out of it. PAY And PAY until I Die lor.
No wonder No.1 high risk- HEART ATTACK.
God’s 2nd coming? how come still dun come, I cannot wait until 20-12-2012
#77
At 62 no MNC wants you so just stay home and observe events unfolding!
If I were at your situation, I believe you will have to work till 70 or later …….as you mentioned Heart Attack but put it in perspective as what I term SDS = Sudden Death Syndromes are all stress related……really cannot balance ones own balance sheet……..such as outstanding HDB or Private Housing Loans, restricted investment opportunities unlike before, Medical Insurance to ponder, High Cost of Living and many many stress related problems to tackle.
Best Bet is for a Big Windfall or in the worst case scenario Wait for END Times or New World Order!
Recommended reading “THE MONEY TRAP” by Ron Gallen…..Interesting!
Blame no one except youself ! Live within your means.
Can or no-can?
If can, we should be asking the president to help check right?
I mean he is our elected president based on justice and equality that we as society helped achieved and he is the independent one that can oversee right?
We should be responsible for our decisions made. Asking on the internet, who has ever received THE answer? I am sure none. Maybe they nono these questions exist?
regards
We Are Responsible – the hardest truth
We seems to be stumbling from from one blunder to another on a slippery slope down the tubes. There was a time when those at the helm used to run a pretty tight ship. But nowadays it seems that this 3rd generation highly paid scholars in their ivory towers, running various gahmen ministries and the areas under their perview, are totally out of touch with the ground. Just recalling the actions of LTA/SLA, Home affairs, Finance etc… can make one’s blood boils.
This TH fiasco would just be added to the list of memorable quotes from our Ministers/MP etc…
I am always reminded of a famous quotation from Lord Acton which I first heard in school – “Power corrupts and absolute power corrupts absolutely”. Given time and without adequate checks and balances this will always be true.
Hey, why keep talking about the 2-4 billion we have lost selling BoA shares??? Just on the 31% contraction of TH from Oct 08 to Mar 09 amounts to $58,000,000,000!!! Yes, $58 BILLION!!! and the 21% contraction of GIC??? $2-4 billion is PEANUTS!!! We should FOCUS on the loss of both TH & GIC owing to the contraction of their portfolio! We do not EVEN know if it is PAPER LOSS or ACTUAL, if some of the shares in the portfolio have already been DIVESTED at a LOSS. What’s the point of a 2nd KEY just to get a $4.9billion for so called workers welfare(last Budget) when more than $58billion minimum have GONE DOWN THE DRAIN!!! Even the most IDIOTIC fund manager will know WHEN TO TAKE PROFIT and not WASTE $58 BILLION! and in 6 SHORT MONTHS!!! Both TH & GIC really GOOFED BIG TIME!!!
OH, IT HURTS SOOOO MUCH WHEN NOBODY BOTHERED TO BRING THEM TO TASK!!! and INSTEAD tried to PACIFY us with the LUNATIC IDEA that IT WAS ALL FOR LONG TERM. Just WHO are they trying to KID??? HEADS SHOULD ROLL especially when TH & GIC staff are supposed to be TALENTED and so WELL PAID!!! NO EXCUSES! NO EXCUSES! NO EXCUSES!
WE WANT ANSWERS! WE WANT ANSWERS! WE WANT ANSWERS!!!
Wah! Breaking News!!! Just heard from the 6.45 pm news on the way home that Tharman mentioned about the $58 billion contraction of TH. Said we must look in perspective of the over$100billion (didn’t hear properly exactly figure) gain TH had in the last 5 years. BIG DEAL!!! GAINED more than $100 billion in 5 years i.e 60 months and LOSE $58 billion in 6 MONTHS???? Aiyah, can still praise people at TH, meh??? They have already got heir pay and fat bonuses for the last 5 years for their efforts. So it’s payback time when they LOSE $58 billion in 6 months. NO iron rice bowl, pay according to MARKET RATE WAGES, so when NON OR UNDER PERFORMANCE, must also take RESPONSIBILITY and GET FIRED!!!!
Accountability ?
Ruling without true representation for 2 decades, results in such mess, are we world class nation ?!?!
world class only on paper!!
look at most of the international rankings. in reality ler…
PAP(er)?
Sideline Watcher.
Some of the gain may as well due to selloff of all electricity plant station of Singapore. This is not gain that attribute to competency but mismanagement. It is traitorous to sell off national asset to feed their gambling addiction.
$58 billions ? Do you believe they only lost this much ?
Tharman’s defence of Temasek in Parliament is just another of those pull wool over your eyes method.
Tharman, while attributing a large part of the fall in value of Temasek from March 2008 to Nov 2008 to the decline of the share prices of its Singapore owned companies (GLCs) but failed to furnish figures to show how much of the supposed gains of Temasek value from 2003 to March 2008 to its portfolio of holdings in the GLCs, not to mention the receipts from the sale of the 3 Temasek owned POWER STATIONS totaling $12 billion. Singaporeans should ask Temasek/Tharman what Temasek’s COST of the 3 power stations ORIGINALLY including most importantly the LAND cost of builidng the power stations and whether the cost of land component of the power stations sold to overseas investors were valued at the then current market price when the sale took place.
87) Lies, Damn Lies & Statistics on May 29th, 2009 12.13 pm
Not lies lah, just presentation at the finest. We must learn how this presentation is done lah. How I wish the whole nation is highly educated in this area.
Since he mentioned 6-year cycle. It would be nice if he could give us the 6-year rolling performance since the inception of funds also giving breakdown performance both from local assets and foreign assets. Hey did I mention local assets ? Just like in football, you have home advantage right ? Just imagination lah.
By long term, Temasek is refering to the gains made since the Big Bang. Archaelogical records in of National Archives will give concrete evidence that when the Big Bang occured, the value of Temasek Holdings was zero. So mathematically, the gains made is infinity.
So what are we complaining about. It’s Long Term !
i m not sure how tharman for the figures abt th doing well nett since mar 03. for example, do we noe if sales of local assets are available viz losses from overseas investments?
86) Daniel on May 29th, 2009 2.56 am
$58 billions ? Do you believe they only lost this much ?
Thats the reason why those MIW and their party will not, at all cost allow to lose in the next coming GE, or else those real figures and many other hidden stuff will start surfacing, and those involved knows damn well that they will be in real deep shit. Opp parties, please be strong and united to help Singaporeans seeking to find out nothing but the whole truth of what’s been hidden from the people all these years.