20141018 What is really happening to our CPF investments?

The PAP has privatised CPF monies into GIC and even had the audacity to pay CPF members the lowest returns in the world for 2 decades. The obvious reason for privatisation is of course to prevent public scrutiny of GIC’s investments. Many investments have incurred huge losses, some almost wiped out.

GIC has been disclosing minimal information in order to prevent the public from knowing the real status of our CPF investments.

Although Minister Lim Swee Say has admitted that “many investments had been lost during the global crises”, many continue to be lost till today.

Singaporeans have the right to know how public funds are invested, the profit/loss of every single investment, etc. The government is not doing anyone a favour by disclosing such information as it is duty bound to do so.

One of GIC’s worst ‘investments’, in percentage terms, is in listed company ‘London Mining’ (LM). (all the information is available online)

03 October – “GIC dumps London Mining * (1)
07 October – GIC Pvt Ltd cuts stake in London Mining to 4.21pct
08 October – London Mining warns shares will likely be worthless
10 October – “Singapore’s GIC exits London Mining * (2)
16 October – London Mining enters administration

With reference to the above, the events look like this on a chart (below).

How much did GIC lose on its investment? Of course GIC would prefer CPF members are kept in the dark but it is not too difficult to estimate.

Since we already know GIC has sold its entire stake way below 10 pence (see chart), the important question would of course be the timing of GIC’s entry into London Mining. According to LM’s 2010 Annual Report (pg 36), GIC was a substantial shareholder with 8,485,184 shares or 7.46%. In 2011, this increased to 8.11% and by 2012, GIC owned 9.26% before slightly reducing to 9.23% by August 2014.

London Mining 2010 Annual Report

Unlike well-managed and transparent state pension funds like Norway’s GPFG, GIC takes a very aggressive approach in investing, sometimes becoming the biggest shareholder.

Summary of GIC investment in London Mining on stock chart

The average price of GIC purchases appears to be at least 200 pence. Using GIC’s slightly reduced stake in August 2014 of 12,780,685 shares, it would have invested at least S$53.7 million. (based on exchange rate of 1GBP = 2.10 SGD and assuming no exchange rate losses)

At an estimated average selling price of 5 pence, GIC would have recovered only $1.34 million. The $52 million loss is only a very conservative estimate which does not include commissions, management fees, etc.

What’s really shocking is the entire investment was almost wiped out and GIC’s loss of more than $52 million of CPF monies was not even reported in the press.

The PAP government has to be upfront with CPF members and allow us to decide if GIC’s model of investment is suitable for our retirement needs. GIC has taken on too many risky investments which appear to be more of speculation than investment.

What is GIC’s real objective for taking huge risks? Is GIC trying to make up for all past losses and has decided the only option is to go for the kill? Why doesn’t the government allow GIC’s accounts to be scrutinised by the public?

* (1)

* (2)

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1 Response to 20141018 What is really happening to our CPF investments?

  1. Xmen says:

    Another investment to watch is Temasek’s investment in Olam. Since paying billions for to prop up Olam in May at $2.23 per share, the shares now trade at $2.08 (as of Oct 17). This is another speculative investment with significant downside risk (according to Muddy Waters.)

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