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!
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The whole thing is a joke.
Nobody in TH is responsible.
Nobody in govt is responsible for the loss.
then what is the point of squeezing our people only to waste the savings into useless and mindless investment like TH did?
This is the standard of so called world class govt.
When we put the “best man” in charge, the yardsticks for performance keep getting shifted to justify competence. That’s when we know how capable the person is. No transparency, accountability, responsibility, professionalism and integrity. That’s reserved only for the decadent West. Uniquely Singapore.
disgusting! where is our CPF money???
Dear Sze Hian,
Relax, it is only a lost of less than 10 billions or less. Old man will tell you that you have no understanding of proportion. They will make back 10x the amount lost by investing in Asia (in particular China and India), but wait, we only get to see them may be 30 years from now. Or may be within 3 years or less (you know GE is not far away, the JIT to show they are smart enough to recover all those losses with huge return by divesting to Asia, that provided things recover on time on target). These days, long term takes on a different meaning indeed. May be when markets are good and coincide with the key period, long term is indeed 2 years or less (well I sure hope someone invented the magic wand).
Anyway, thanks for your analyses and commentary, good work.
Perhaps this shows that nepotism or elite lineage does not equate to financial wisdom.
Ho Ching, you are the Xi Shi of Singapore. A job well done.
Even the Britain doesn’t understand our system of Leegalised corruption. If you pay something so much better than corruption naturally there is little corruption to speak of, and you can even sleep peacefully at night. The fact that the pay is so much better than corruption will even cause people to have group think mindset just to stay in a job with high pay.
Singapore system might have prevented the expenses scandal
“http://www.theherald.co.uk/features/letters/display.var.2510115.0.Singapore_system_might_have_prevented_the_expenses_scandal.php”
Look at how our clown answer
“Unlikely, say MPs, simply because there is no ‘claims system’ for MPs.
Instead, MPs get an annual allowance of $190,000. This includes any bonuses they might receive that year.
The allowance is meant for them to meet their expenses as they look after their constituencies.
Said MP Seah Kian Peng (Marine Parade GRC): ‘It’s a clean wage system, and that’s it. What we get covers everything. Every expense that you incur comes from your allowance or your own account.’”
Really Pouring cold water. Just because the government give salary and perks better than corruption doesn’t make them any less corrupted because it is the government who approve it, not the citizens.
Just look at how much
“http://www.telegraph.co.uk/news/newstopics/mps-expenses/5375135/MPs-expenses-Cash-secrets-of-the-politicians-who-keep-it-in-the-family.html”
“The disclosures raise further questions about the system that allows MPs to employ family members at a total cost to the taxpayer estimated at up to £5.8 million a year.”
Farking clowns ruling our country.
the last time we heard is that Tharman ask us to TRUST the government but yet not a single Ivory tower gahman is really responsible and accountable in the government. Uniquely Singapore government.
# 3) Anon
where is our CPF money???
Huh? what cpf? what money? maybe still show in your cpf statment lah . . . .
Even the Finance Minister, who is responsible for the State treasury,
cannot even utter a word that may deem to be questioning
Temasek Holdings investments.
Quote:
Finance Minister said in response to the BoA loss, that they do not
question the day-to-day investments of Temasek?”
This is a loss of billions in a tranaction what day to today!
I lost my confidence period!!
I like what Kway Teow Man says
“The KTM point is that he’s not interested in the Government’s view “an investment should be assessed ‘over the long term’”. What “long term” are we talking about in this case? The stake has already been sold. :-P
Watchdogs should press for Tharman to have Temasek issue a statement on the facts of the deal. :-P”
“http://kwayteowman.blogspot.com/2009/05/public-deserves-better-explanation-for.html”
Look like Kway Teow Man will have to fry kway Teow for the rest of his life. No retirement, no CPF, no dream, only Kway Teow.
“Huh? what cpf? what money? maybe still show in your cpf statment lah . . . .”
You can just fill any amount of CPF you want as long as you can’t take out cos The last time I heard Temasek says about the investment loss as paper loss not actual loss. Hmmm… .so your CPF money is better off as paper money, can see but cannot touch.
what is so difficult about calculating the loss?
buy – sell . period.
TOC, write in to SEC to make an equiry….they would provide more details as Temasek was holding a 3percent stake…
It must be known to whom the shares was off loaded to….(must be known)
Buy high, sell low is very serious…
Temasek have given a statement in front of a Congress Commitee…on it’s funds….exract that hearing and Q & A’s (if possible) ….more answers ….
The last time I read is that when there is 2 CENTS decrease in public transport fare, the mainstream went on orgasm mode on the wonder, love and compassion of GLC. All the excitement and grandiosity of such “generous 2 cents” so surreal. But when Temasek lost unprecedented billions through buy high , sell low strategy, such “celebration” is confined to pathetic small section of ST and in ST Forum with all the usual rhetoric and feelgood reporting.
Somtimes I wonder who the real Communist were in our history.
The Long Term has now become the Wrong Turn.
This news surfaced only AFTER Bloomberg queried and ran the story. Was it also at the same time that TH announced their ‘new’ 10:20:30:40 portfolio allocation re-jig and without announcing the divestment? What is this? Smokescreen? Would TH have announced this if Bloomberg didn’t run that story?
The FM didnt even annoucne that TH had divested in BOA in Parliament sitting in April despite the investment having been sold during Q1. You mean to say this is not worthy information to INFORM THE PEOPLE OF SINGAPORE that such a HUGE loss has been made? Does the People of Singapore still own the funds in TH?
It shows that they don’t care a hoot for the citizens.
VOTE WISELY . P L E A S E
LKY & LHL kept telling us that they have a team of “talent” who can run this country, at good bargain and Singapore does not have talent to lead key instituions so that the father has to pick someone among his own family members whom he believed were more talented than 3.5millions others in the red dot:- the son become PM, daughter in law chairman of Temasek and himself leading GIC and ironically someone not talented and puppeted to hold 2nd key to our reserves…etc. Unfortunately all his comments cannot be substantiated by his selects with poor strategy, bad judgement which lead to record poor performances and billions losses at the expenses of Singaporeans decades of hard work.
Looking back, LKY & LHL have carried their jokes too far this time, and our msm did not do Singaporeans any justice either. They praised Ho Ching for taking the courage to minimise lost and motivated her, with full report, on Labour day with golden award. All these “behaviours” are not something the private sectors can tolerate let alone rewarding poor performer for top achiever of this country.
Singaporeans worked hard for this land and our accumulated savings did not come easy without losing our sweats, blood and sometime lives of individual. Eventually we have accummulated enough to last thru the crisis only to have one woman recklessly threw it away before the storm. Now that the storm is here to justify helping Singaporeans for their hard work, we get none – sufferings continue with no other solutions, from the elites, except to wait for America to recover.
Was it really a bargain to get these “talents” to work or was it familee business that losing our money is not equivalent to losing theirs such that Ho Ching said she has no regrett losing it. On that note of hers, I felt cheated putting my savings in cpf all these years.
I thot they said its for LOOONG TERM?
Why U-Turn ?
Like this where got shiok ?
Wait for it to rise above the price they bot in 30 years and prosperity mah.
Buy also they do.
Sell also they do.
Hold also they say.
Aiyoh, I no no what is going on siah.
How this affect our future? Many no no leh. Still in Obliv leh.
Lets UpStream the DownStream as we Up Up the Down Down so as to achieve.
Hip hop hurray!
regards
Makan Makan shiok
Relax guys, just wait and see what grandmother’s story that they tell again. Loss is Loss. Some one will have answer for it, either LKY, LHL, FM etc…. Wait till the next election, they will know ‘People’s Power.’
Sorry to be upfront, guys. Singaporeans are cheap – just threw at us a couple of hundreds 3 days before election, we will be at our knees thanking our men in white with tears in our eyes.
” Some one will have answer for it, either LKY, LHL, FM etc”
I thought they already find someone to answer for it, and that “someone” is NOBODY ? Since when they have to answer directly ? It is always NOBODY who take the rap but it is them that take the credit.
Nobody = Complacency
Nobody = Caveat Emptor
Nobody = Trust
Nobody = Honest Mistake
Nobody = Long Term Investment
Yes, NOBODY is responsible and accountable for all the honest mistakes and shi–TT of government, and the citizens is the one paying for it.
Credit to NOBODY for that. whoever he is.
aiyoyo
ELITEs?? Losses…
if non-ELITEs, think will not make Losses hor…
when can cpf $ take out??
keep thinking, $B Losses, how many people can be helped in this country??
and who is the end winner for the $B that ELITEs Lost??
aiyoyo
I suppose this is the ultimate price our Govt leaders has to pay for suing the western critics indiscrimately. There is no just no love lost if Singapore loses its pants over any of her investments. Maybe it all has been a setup.
Looks like the LeeFamily members are more of a liability to Singaporeans for their arrogance. If in other countries, they would have been pounded into minced meat.
I think it’s about time for Singaporeans to say enough is enough. Please don’t think we are fools to be conned again and again.
We have to show PAP that we are completely disgusted with it’s NO ACCOUNTABILITY system of governance.
“when can cpf $ take out??”
Only when you dream.
“keep thinking, $B Losses, how many people can be helped in this country??”
Are you serious ? Citizens are just digits and hence citizens should be the one helping the government with the loss. $B loss is just peanut compare to amount that can squeeze from the digits. Wow, how about coming 6.5 millions digits.
“Wait till the next election, they will know ‘People’s Power.’”
But can People’s power beats the GRC’s Power ?
aiyoyo
see today news :
“MPs urge S’poreans to seize opportunities amid adversity”
not sure ELITEs will talk about TH Losses + how to recover???
aiyoyo
“..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…”
I cannot understand the above statement.
So how long is this “long term” gonna be? 10 years? 20 years? 50 years? till we are all in our graves?
If the investment strategy is not aimed at delivering target returns on a year-to year basis, then how are the annual performance bonuses measured against then? are they also given out over various time horizons?
#3,
the way they see money lost like nobody business (TH) will be the same for our cpf money where you see it there but can’t touch.
#19,
if nobody seem to care like you said then nobody is running this country yea….to them..afterall who cares??
“if nobody seem to care like you said then nobody is running this country yea….to them..afterall who cares??”
Yes, NOBODY is running this country and SOMEBODY is running this business as Singapore INC. High pay to attract people and doesn’t that sound like running business than country ? Aren’t it attracting kangaroos than human ?
Nobody is responsible with all those losses cos they are just Honest Mistakes made by the Elites. After a while, nobody’s gonna talk about it anymore cos we all Moved On! Sigh…same cow-dung but on different days & by different farmers, that’s all!
Since NOBODY is solely responsible for billion-dollars investment loss then NOBODY will explain and account for the investment loss in parliament. Does that sound sensible ?
time to scrap CPF system. let people decide for themselves how to handle their own money. personally, i would rather let my money depreciate due to inflation then let some highly paid dude loose it on my behalf.
at least in the form of cold hard cash i can use or not use it as i deem fit. dun give all the crappy reason the money can only be used for the limited this & that or only can be used after retirement.
my money is my money, times have changed. its time to do a survey on whether CPF should be scrapped? we as a citizen (on the whole) are more financially savvy (my assumption lah) than those of the early generation.
if i am wrong on anything, please correct my impression.
btw, nobody is talking about an imminent election already?
i think with this kind of report card, they will be smart to lie low for a while…
Dear TOC,
I dont know why you spent so much time analysing a TH letter that basically says nothing. I mean, they say market is bad, long term view, diversified investments, realignment of investments, blah, blah …. just talk to any low-grade DBS financial advisor or even auntie/uncle investor and you hear for free! But wait, such highly-paid advice causes things like the Lenman Bros. case, right?
Maybe TOC should do an article on how many keys were needed to let TH invest such LARGE amounts. I mean, we require a Presidential second key to unlock 4.3 billions of reserves to kickstart the economy. So, I imagine at 39B losses (as of last Nov.) would require authority nearer to a bunch of demi-Gods. No point asking FM who dont even know a plus from a minus budget. What is “substantial gains” previously made by TH — did they start with 1B, grew (without further capital injections) to 125B and then lost (on paper?) only 39B? Or invested overall 100B, grew to 125B (substantial 25% gain) & blew 39B?
Hell, I am probably wasting my time …… Just to leave a quote:
An army of asses led by a lion is vastly superior to an army of lions led by an ass — George Washington. TH, STTA, Mas Selamak …. etc. who is leading? Donkey?
Hi
Whatever +ve returns that TH and GIC earned during the years, are they transferred back to us at all?
If not, short term or long term, it does not matter. Cos we dont see the money anyway.
Don’t worry too much as my friend said you got CPF mah?…..Cash Paid Funeral
lah!
If in the short term(foreseeable) one can not make money and if one happens to make money in the long term(unforeseeable) then it must be pure luck.
Among all the crap PAP cook up so far, the mega losses suffered in western financial investment is by far the most stupid, idiotic, ignorant, and arrogant.
It really makes my blood boil looking at PAP “act blur” attitude. Not only nobody admit or apology, yet they still come up with stupid excuses to misled Singaporean.
Can somebody tell them that our generation are smart enough to see through their tricks?
Our president should be partly responsible for not querying the losses. He should be vigilant too and not simply busy himself with grandstanding. As a 2nd key holders, the citizens put their trust on him and he is paid highly to do his job well. Now that we loss billions of dollars through his nose, is he not answerable? What is our president for and why is he there for not serving any purposes?
I urge citizend to presurrize the president to do his job, we cannot afford another billion dollars losses. It is too painful just by hearing it. Singapore should not become another poor country after our people have put in all their hard work.
I hope Tan Kin Lian can be brought into istana and and checked on the record of nathan’s work there.
…the People’s reaction about this matter, their mentality, their response.
They enabled.
Another brilliant title! Well done, TOC.
Sze Hian,
An excellent article. Logical arguments and logical questions.
Kudos to you.
Precisely, nothing meaningful has emanated from Temasek.
Someone recently asked about HC’s qualifications/experience. This person was probably unaware that she is the wife of the PM and the daughter-in-law of MM. Those are her biggest qualifications. What more by way of qualifications can a woman ask?
The evidence is clear – nobody, in Temasek or the govt, is going to take responsibility for Temasek’s losses. And no one dares to engage in finger-pointing. Because he/she herself may also be implicated. Or because it may mean termination of services, or being ridiculed as a traitor. In which case the citizenry will not know the facts. Facts in this case are to be seen as esoteric, confined to a few, perhaps.
This is a textbook example of opacity and double-speak which should henceforth be taught in business schools around the world.
QUOTE
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.
UNQUOTE
Can anybody explain to me in plain English what this means ?
Ms Myrna Thomas, highly paid Managing Director of Corporate Affairs of Temasek Holdings: we really expected better from you.
The corporate communications staff of Temasek Holdings, no doubt reflecting the attitude and culture of its board of directors, has much to learn where it comes to openness and honesty when dealing with its stakeholders, in particular the people of Singapore. It is not for them to dispense information in dribs and drabs, as they please, on sufferance; rather it is a duty they owe to the people. They must discharge this duty fully, frankly and with complete honesty. The people expect and, will accept, nothing less.
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??
{#45 Peter Sellers]
Great post, Peter.
“Can anybody explain to me in plain English what this means? ”
Lol. Only Myrna Thomas. She wrote it or sanctioned it, presumably.
anything to do with temasek or hc will easily draw attention, we love kpkp
honestly, how do you expect temasek to tell much when it lost so much?
It is shameful you know, having lost so much.
They are not going to waste time telling you how they screwed up.
It is common sense.
Imagine they tell you the truth like, I got drunk that night before… It will have an enormous impact on Singapore youth.
This is a joke.
OK, guys let’s be fair to the Temasek crowd here – if you claimed to be a genius and that God reported to you ….you would not want your losses of other people…..ooopppps I mean the Nation’s money to be revealed here.
The fish rot starts from the head, as the saying goes.
Ho Ching fumbled that’s all, and like everyone from that family, nobody is beneath himself to apologise or to admit mistakes,except to bulldoze their way through thick-headedly and insist that they are right.
I have never seen such audacity, such gall, and such gumption to defy and deny the weight of the truth.
Her father-in-law may be powerful politician but lousy gambler. She may be a good engineer, but a damn lousy CEO. Her hubby, so far, nothing good memorable has happened under his watch, except escape of a terrorist, losses in investments, reserves, jobs, votes, confidence and overall credibility.