20150206 Temasek’s US$10 billion dollar bets carry unnecessary, huge risks

Temasek should improve its transparency and publish ALL information on its investments similar to Norway’s Government Pension Fund Global. When a fund 5 times the size of Temasek is able to publish its entire holding of more than 8,000 equities, why does Temasek only disclose its 42 major investments in 2013 and 46 in 2014?

Moreover, Temasek’s investments have already been compiled by financial data vendors and are available online. Citizens are the owners of our reserves and it is our right to have access to such information. A listed securities portfolio of 74 investments in 2013 is enclosed at the bottom of this post.

The top ten listed investments in market value made up 50% of Temasek’s total assets. Unlike other funds where risk is diversified, Temasek seems to be trying to put as many eggs into one basket as possible with an 18% stake in Standard Chartered PLC and 7% in China Construction Bank, more than S$30 billion invested in 2 foreign banks.

(Market value in US$ million)

. Security Shares % Market value Country Sector Ticker
1 SINGAPORE TELECOM LTD 8,283,957,568 51.96 26430 SINGAPORE Telecom ST SP
2 CHINA CONSTRUCTION BANK-H 17,878,670,050 7.44 14920 CHINA Financials 939 HK
3 STANDARD CHARTERED PLC 432,746,145 17.88 10450 BRITAIN Financials STAN LN
4 DBS GROUP HOLDINGS LTD 713,033,749 29.22 9910 SINGAPORE Financials DBS SP
5 SINGAPORE AIRLINES LTD 657,800,748 56.11 6000 SINGAPORE Industrials SIA SP
6 SINGAPORE TECH ENGINEERING 1,559,393,443 50.26 5460 SINGAPORE Industrials STE SP
7 CAPITALAND LTD 1,680,704,140 39.48 5080 SINGAPORE Financials CAPL SP
8 SHIN CORP PCL 1,334,354,825 41.62 3950 THAILAND Telecom INTUCH TB
9 SEMBCORP INDUSTRIES LTD 883,919,088 49.47 3540 SINGAPORE Industrials SCI SP
10 KEPPEL CORP LTD 377,344,425 20.89 3290 SINGAPORE Industrials KEP SP
. . . Total US$89 bil

Both investments will have no room for error because their potential losses will dwarf losses of smaller investments.

Has Temasek not learnt any lesson from its US$4.6 billion loss in its Merrill Lynch investment and US$1.5 billion (80%) loss in Barclays Bank?

By placing bets of more than US$10 billion on any investment, Temasek has taken risks on behalf of Singaporeans, risks which we would not have assumed. If Temasek’s own costly mistakes are insufficient, it should learn from GIC’s S$14 billion UBS bet in 2007 which is still 40%* underwater after 7 years. (*inclusive of 18% interest payment, dividends and recent forex gains)

Should both banks fail spectacularly, will Lee Kuan Yew step in and tell us that Temasek intends to “keep for the next two to three decades and grow with them”?

Standard Chartered investment has been in Temasek’s stable for almost a decade, currently sitting on paper losses of at least 30% without any turnaround in sight. Was this part of Temasek’s investment strategy?

Standard Chartered’s entire profits last year may have been wiped out by the collapse in commodity prices and there appears to be another rights issue on the horizon.

Although dividend payments could have made up for most of the capital loss, including rights issue, forex loss could still amount to some 25% after almost a decade.

Should Temasek decide to divest Standard Chartered at current prices, the net loss would be at least S$3 billion. It will take numerous $10 million/$100 million investments to make up for a single huge loss. By taking up such a huge stake, all exits have now been shut and it will take a miracle to dispose of Standard Chartered at a profit.

In 2011, Temasek had indicated it wanted to trim its Standard Chartered stake when it raised S$650 million from the sale of zero coupon exchangeable bonds maturing in 2014. Since the bonds were fully redeemed in 2014, Temasek had missed the only opportunity to reduce its holding when the price was more favourable.

Should Temasek realise billion-dollar losses, there will also be political backlash and Temasek appears to be aware of this. Despite stock market making new highs, Standard Chartered shares have gone in the opposite direction. What happens when global stock market tanks?

Temasek’s major investments in China’s financial sector appear to be more profitable but an analysis would be required to confirm this.

China’s double-digit growth during most of the last 2 decades are over. China’s growth story has been based on the expansion of credit – some US$15 trillion after the last financial crisis with a significant amount for financing infrastructure and real estate which includes ghost cities generating zero return. Investments at the tail end of China’s phenomenal ‘growth’ carry significant risks.

Video of China’s ghost cities

In April 2014, a Forbes article reported that Li Ka Shing and his family had been “on a selling spree in Mainland China since last August (2013)”. Li was way ahead of most foreign investors when it came to investing in China whereas Temasek has only recently committed tens of billion$ of our reserves.

Excluding GLCs transferred to Temasek, Temasek does not appear to be investing but speculating and going for the kill with its $10 billion investments.

Temasek seems to be in a hurry to make as much money as possible with humongous bets which are extremely risky. As a significant shareholder in many foreign companies, Temasek is unable to divest during times of great volatility. Temasek should diversify and not make US$10 billion dollar bets which carry unnecessary risks.

**
I have been trying to verify Temasek’s ridiculously high TSR and no luck so far. What I do is Google ‘Temasek’ and ‘name of investment’ and pieces of interesting information will show up on the screen. Frequently, data may not be complete and this is the result of Temasek’s conscious effort not to allow the public to scrutinise its performance. Should others be able to confirm Temasek’s 16% 40-year TSR, please share the information.

2013 May – Temasek listed securities portfolio.

. NAME MKT VAL TICKER
1 SINGAPORE TELECOM LTD 26430 ST SP
2 CHINA CONSTRUCTION BANK-H 14920 939 HK
3 STANDARD CHARTERED PLC 10450 STAN LN
4 DBS GROUP HOLDINGS LTD 9910 DBS SP
5 SINGAPORE AIRLINES LTD 6000 SIA SP
6 SINGAPORE TECH ENGINEERING 5460 STE SP
7 CAPITALAND LTD 5080 CAPL SP
8 SHIN CORP PCL 3950 INTUCH TB
9 SEMBCORP INDUSTRIES LTD 3540 SCI SP
10 KEPPEL CORP LTD 3290 KEP SP
11 IND & COMM BK OF CHINA-H 3270 1398 HK
12 SP AUSNET 2190 SPN AU
13 REPSOL SA 1920 REP SM
14 NEPTUNE ORIENT LINES LTD 1530 NOL SP
15 BANK OF CHINA LTD-H 1520 3988 HK
16 LEVEL 3 COMMUNICATIONS INC 1310 LVLT US
17 SATS LTD 1230 SATS SP
18 MOSAIC CO/THE 1190 MOS US
19 MAPLETREE LOGISTICS TRUST 1060 MLT SP
20 MAPLETREE COMMERCIAL TRUST 970 MCT SP
21 SMRT CORP LTD 951 MRT SP
22 EVONIK INDUSTRIES AG 853 EVK GR
23 OLAM INTERNATIONAL LTD 832 OLAM SP
24 HUTCHISON PORT HOLDINGS TR- 780 HPHT SP
25 MAPLETREE INDUSTRIAL TRUST 625 MINT SP
26 STATS CHIPPAC LTD 619 STAT SP
27 QUINTILES TRANSNATIONAL HOLD 376 Q US
28 MEG ENERGY CORP 295 MEG CN
29 NEW CHINA LIFE INSURANCE C-H 286 1336 HK
30 CHENIERE ENERGY INC 277 LNG US
31 TURQUOISE HILL RESOURCES LTD 266 TRQ US
32 SHANGHAI PHARMACEUTICALS-H 246 2607 HK
33 CITYSPRING INFRASTRUCTURE TR 224 CITY SP
34 CITIC SECURITIES CO LTD-H 192 6030 HK
35 CITIC RESOURCES HOLDINGS LTD 119 1205 HK
36 AIR PRODUCTS & CHEMICALS INC 115 APD US
37 FACEBOOK INC-A 114 FB US
38 KEPPEL REIT 92 KREIT SP
39 BAIDU INC – SPON ADR 90 BIDU US
40 LAI FUNG HOLDINGS LTD 82 1125 HK
41 ZOOMLION HEAVY INDUSTRY – H 75 1157 HK
42 COSCO CORP SINGAPORE LTD 71 COS SP
43 EXPEDITORS INTL WASH INC 66 EXPD US
44 PETROLEO BRASILEIRO-SPON ADR 63 PBR/A US
45 MONSANTO CO 60 MON US
46 HUANENG RENEWABLES CORP-H 52 958 HK
47 NEWOCEAN ENERGY HLDGS LTD 46 342 HK
48 SAM ENGINEERING & EQUIPMENT 39 SEQB MK
49 COACH INC 35 COH US
50 AMYRIS INC 33 AMRS US
51 TIGER AIRWAYS HOLDINGS LTD 32 TGR SP
53 POTASH CORP OF SASKATCHEWAN 31 POT US
52 ASCOTT RESIDENCE TRUST 31 ART SP
55 ASIAN CITRUS HOLDINGS LTD 26 ACHL LN
54 MARIN SOFTWARE INC 26 MRIN US
56 CAPITACOMMERCIAL TRUST 19 CCT SP
57 CLEAN ENERGY FUELS CORP 18 CLNE US
58 SEADRILL LTD 16 SDRL US
59 APPLE INC 16 AAPL US
60 YY INC-ADR 14 YY US
61 PEABODY ENERGY CORP 13 BTU US
63 AMTEK ENGINEERING LTD 10 AMTK SP
62 CHENIERE ENERGY PARTNERS LP 10 CQP US
64 CF INDUSTRIES HOLDINGS INC 8 CF US
65 AGRIUM INC 7 AGU CN
66 ISOFTSTONE HOLDINGS LTD-ADS 6 ISS US
67 SHOUGANG CONCORD TECH HLD 6 521 HK
68 DYNA-MAC HOLDINGS LTD 6 DMHL SP
69 MELCO CROWN ENTERTAINME-ADR 5 MPEL US
70 CEI CONTRACT MANUFACTURING 5 CEI SP
71 INTREPID POTASH INC 5 IPI US
72 SEMBCORP MARINE LTD 4 SMM SP
73 SINGAPORE POST LTD 0.7 SPOST SP
74 M DREAM INWORLD LTD 0.08 8100 HK
. TOTAL MARKET VALUE US$113.5 bil

2012 Sep

. NAME MKT VAL TICKER
1 SINGAPORE TELECOM LTD 23660 ST SP
2 CHINA CONSTRUCTION BANK-H 12220 939 HK
3 STANDARD CHARTERED PLC 10400 STAN LN
4 DBS GROUP HOLDINGS LTD 8400 DBS SP
5 SINGAPORE AIRLINES LTD 5790 SIA SP
6 SINGAPORE TECH ENGINEERING 4430 STE SP
7 CAPITALAND LTD 4410 CAPL SP
8 SEMBCORP INDUSTRIES LTD 4090 SCI SP
9 KEPPEL CORP LTD 3540 KEP SP
10 SHIN CORP PCL 2980 INTUCH TB
11 IND & COMM BK OF CHINA-H 2620 1398 HK
12 SP AUSNET 1800 SPN AU
13 NEPTUNE ORIENT LINES LTD 1630 NOL SP
14 BANK OF CHINA LTD-H 1170 3988 HK
15 MOSAIC CO/THE 1160 MOS US
16 SMRT CORP LTD 1120 MRT SP
17 SATS LTD 1040 SATS SP
18 MAPLETREE LOGISTICS TRUST 918 MLT SP
19 HUTCHISON PORT HOLDINGS TR-U 766 HPHT SP
20 MAPLETREE COMMERCIAL TRUST 742 MCT SP
21 OLAM INTERNATIONAL LTD 663 OLAM SP
22 MAPLETREE INDUSTRIAL TRUST 556 MINT SP
23 STATS CHIPPAC LTD 535 STAT SP
24 MEG ENERGY CORP 461 MEG CN
25 INMET MINING CORPORATION 394 IMN CN
26 CHENIERE ENERGY INC 258 LNG US
27 NEW CHINA LIFE INSURANCE C-H 229 1336 HK
28 SHANGHAI PHARMACEUTICALS-H 219 2607 HK
29 TIGER AIRWAYS HOLDINGS LTD 204 TGR SP
30 CITYSPRING INFRASTRUCTURE TR 201 CITY SP
31 CITIC SECURITIES CO LTD-H 156 6030 HK
32 SHANGRI-LA HOTELS (MAL) BHD 140 SHMB MK
33 CITIC RESOURCES HOLDINGS LTD 126 1205 HK
34 BLACKROCK INC 114 BLK US
35 COSCO CORP SINGAPORE LTD 91 COS SP
36 BAIDU INC – SPON ADR 78 BIDU US
37 PETROLEO BRASILEIRO-SPON ADR 75 PBR/A US
38 LAI FUNG HOLDINGS LTD 58 1125 HK
39 TURQUOISE HILL RESOURCES LTD 50 TRQ CN
40 SAM ENGINEERING & EQUIPMENT 48 SEQB MK
41 ASIAN CITRUS HOLDINGS LTD 32 ACHL LN
42 ISHARES S&P 500 INDEX FUND 27 IVV US
43 SPDR S&P 500 ETF TRUST 26 SPY US
44 CLEAN ENERGY FUELS CORP 23 CLNE US
45 HUANENG RENEWABLES CORP-H 20 958 HK
46 AMYRIS INC 19 AMRS US
47 SEMBCORP MARINE LTD 18 SMM SP
48 MELCO CROWN ENTERTAINME-ADR 17 MPEL US
49 PEABODY ENERGY CORP 16 BTU US
50 CAPITACOMMERCIAL TRUST 16 CCT SP
51 SEADRILL LTD 15 SDRL NO
53 ISOFTSTONE HOLDINGS LTD-ADS 8 ISS US
52 MINDRAY MEDICAL INTL LTD-ADR 8 MR US
55 ABERCROMBIE & FITCH CO-CL A 6 ANF US
54 SHOUGANG CONCORD TECH HLD 6 521 HK
56 CEI CONTRACT MANUFACTURING 5 CEI SP
57 AMERICAN INTERNATIONAL GROU 4 AIG US
58 MONSANTO CO 4 MON US
59 SUNNINGDALE TECH LTD 4 SUNN SP
60 SICHUAN MEIFENG CHEM INDUS-A 3 000731 CH
61 KOSMOS ENERGY LTD 2 KOS US
63 DYNA-MAC HOLDINGS LTD 2 DMHL SP
62 POTASH CORP OF SASKATCHEWAN 1 POT CN
64 SINGAPORE POST LTD 0.58 SPOST SP
65 NQ MOBILE INC – ADR 0.27 NQ US
66 M DREAM INWORLD LTD 0.06 8100 HK
. TOTAL MARKET VALUE 97824.91
Advertisements
This entry was posted in TEMASEK. Bookmark the permalink.

One Response to 20150206 Temasek’s US$10 billion dollar bets carry unnecessary, huge risks

  1. Hey says:

    this article explains why Temasek’s claim of 16% return are nonsense:

    therealsingapore.com/content/returns-claimed-temasek-are-nonsense-here-why

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s