I am now more concerned about my CPF after analysing more GIC investments.
GIC appears to have no exit plans and will only divest after investments have been decimated. Link Even a novice investor knows one needs to have an exit plan.
Contrary to PAP’s claim that there’s no need to take on riskier investments, many investments by Temasek and GIC are very risky ie many have collapsed within a few years. GIC has been able to continue engaging in risky investing due to the lack of transparency and accountability.
In May 2011, GIC (formerly GSIC) became a substantial shareholder in OneSteel, an Australian company. Link to article It was renamed Arrium Ltd in 2012.
According to the same article:
– GIC bought 19.6 million shares at an average price of A$2.38 between January and May 2011.
– Prior to 2011, GIC already owned an additional 47.6 million shares bought above A$3.
– GIC owned a total of 67.2 million shares in May 2011.
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GIC’s paper loss excluding dividends was estimated to be about A$60 million when the stock price was A$1.90. At 18 cents today, its losses would have increased to A$226.4 million. Based on the estimated average price of A$3.55 per share in the article, our CPF investment has lost about 95% in value.
But GIC’s losses are much higher than the S$1/4 billion loss because it has more than tripled its stake from 67.2 million shares to 241.26 million shares. Most of the additional shares were likely bought between A$1.6 to A$.50, translating into total losses likely to exceed A$300 million. (GIC should not disclose only profitable investments in the press)
The collapse in Arrium’s share price reflects fundamental changes in its business. Why did GIC continue to triple its stakes in Arrium, as if there was no tomorrow? This is likely due to its knowledge that there was an endless supply of CPF. It therefore need not divest Arrium despite unrealised losses amounting to more than 90%.
There are too many wipeouts which confirm GIC is not the stellar fund manager as widely believed, not only Arrium and a few others.
Unless GIC improves its transparency, similar to Norway’s GPFG, its fund management appears to be based on a ‘tikam-tikam’ model. Heads GIC/PAP wins, tails CPF members lose.