Most Singaporeans have blindly accepted every statement by Temasek as the gospel truth. Are Temasek’s stated returns factual? If they are, why has Temasek continued to engage in selective transparency for 4 decades?
When we look at its Chinese investments, the share prices of bigger Chinese banks confirm they are mediocre investments. Temasek is not the savvy investor our nation-building press makes it out to be. It’s directors have been paid millions to invest in stocks which, on average, perform worse than global stock indices such as S & P 500.
As for the S&P 500, it has been making new highs since 2013.
Singaporeans should worry because Temasek has invested (speculated) tens of billions of our reserves in Chinese banks selling at below price to book value. This “reflects doubts over the bank’s bad-debt levels and concern that these will rise as China’s economy continues to slow”. Since capital raising is also on the horizon, billion$ more of our reserves will be sucked into a black hole.
Doesn’t it look like any Ahmad or Ah Kow could qualify to be a fun manager in Temasek?
On US investments, let’s take a look at the 10 recent US stocks (below) which Temasek has divested its total interest in Q3 2015.
Image source: link
Cognizant Technology Solutions, Medtronic PLC, Synchrony Financial did pretty well and eBay was also profitable. But what about the rest such as Petrobas, Clean Energy Fuels Corp, etc?
(Image credit for 4 charts below: Yahoo Finance)
(Any error is unintentional. Prices are estimated due to a lack of disclosure by Temasek and if uncorrected by Temasek, I will assume they are almost factual.)
Are the above good investments, investments which you thought could not have been in Temasek’s portofolio? How does Temasek make any money when a high ratio of its investments are underwater? Isn’t Temasek making most of its profit from local investments?
Singaporeans really have NO idea how our reserves have been managed by Temasek – it has been speculating billion$ in global stock markets which are a large casino.
Temasek has also been forced to hold on to investments sunk deeper than NOL, such as Standard Chartered PLC.
After investing more than S$10 billion in Standard Chartered, including 2 rights issues, the capital loss is about 60% after almost 10 years! Worse, Temasek will be committing an additional S$1.13 billion in the third rights issue since 2008. This wasn’t in Temasek’s game plan and funny thing is Parliament can’t prevent Temasek from throwing good money after bad.
The mistake by Temasek was its greed – it had bitten off more than it could chew. With an 18% stake, Standchart had no room for error or it will lose too much face for PAP. A smaller stake would have allowed Temasek to exit earlier with a profit or perhaps a much smaller loss. Now that Standchart has failed and we are stuck with it for good, what would LKY have said?
Besides $1.13 billion for Standchart, our Chinese banks will be also asking for billion$ from Temasek. Hmm … how come when it comes to our welfare, PAP becomes so kiam-siap and needs to know if we are eating at a hawker centre, food court or restaurant?
Every fund manager will have some bad investments in his portfolio but the high ratio of lousy ones in Temasek’s is quite shocking. Hopefully, these can be highlighted in a future post for Singaporeans to get to know our SWF better.
Temasek should be upfront and disclose both positive and negative investments. Singaporeans should not accept a Temasek which trivialises poor judgement costing billions in tax dollars or twist failure into success.