Temasek’s transactions need to be scrutinised by Parliament because it is not the long-term investor as claimed.
According to a 2011 Bloomberg article, “Temasek Holdings spends $2.8 billion for shares in China Construction Bank”, Temasek bought the same shares it had sold only 8 weeks earlier. (see chart below)
According to the same article, “Temasek said after the sale that it remained “bullish” on CCB”. Temasek’s sale of CCB contradicts its statement because when one is bullish on a stock, one does not sell but buy.
Temasek said the sale was part of its “portfolio rebalancing”. A “portfolio rebalancing” would have required Temasek to invest in companies unrelated to CCB in non-banking sectors.
Temasek’s statements were therefore nonsensical at best.
Parliament must not continue to allow billions of our reserves to be transacted by Temasek at its whim. Temasek was clearly not investing for the long term in the above CCB transaction and appears to be speculating.
According to the New York Times, “Temasek’s chief, Ho Ching, likes to take risks”.
I would like to thank Chris K for his comments on my TRE post that (Temasek) “Being a long term investor does not mean one is not opportunistic.”
My reply to his comments:
I do not disagree with Chris K that Temasek could be opportunistic. But is CCB, which has been range bound for 3 years an opportunity when the S&P has gone from 1200 to 2000? And what about other stocks?
I highlighted the silly reasons given by Temasek – if it claims to be bullish, then it should have just held on to the stock. No competent fund manager would say he is bullish but sell, bearish but buy.
The more ridiculous part was about “portfolio rebalancing”. It means selling Stock A and buying Stock B. Instead, Temasek sold Stock A and bought even more of Stock A only 8 weeks later.
The cash raised from the sale of CCB could have been used for better investment opportunities.
Being opportunistic should not mean allowing Temasek to trade like a speculator because our reserves are not meant for short term trading. It should mean investing like Warren Buffet and taking a long view of the market.