CPF members have been taken for a ride but many are still reluctant to engage PAP and hold them accountable. Ignorance in this case is not bliss but stupidity. No sane person would allow another, or a government, to dictate the usage of his own money.
PAP has never provided a shred of evidence that our CPF investments have not been wiped out. If there is nothing wrong with our investments and Norway could disclose its investments in more than 9000 listed companies, why is GIC afraid of transparency?
Why should I trust a government which has been concealing material information for decades? And we are not talking about $30 million or $300 million but $300 billion worth of investments.
I chanced upon a listed portfolio of GIC securities and the businesses that GIC invested in are not what we CPF members would invest in ourselves. GIC’s May 2013 listed portfolio (take note some of them may have been divested).
And since most CPF members intend to retire in Singapore, why is PAP investing 100% of our CPF in overseas assets, unnecessarily subjecting our retirement savings to huge forex risks beyond its control? This does not make any sense to me.
Just how risky are foreign investments? If GIC has not divested its stake in Arrium Ltd, it may lose almost the entire capital of more than $100 million as Arrium has been placed in voluntary administration.
And why did GIC invest in New World Department Store when online shopping has been gaining popularity?
With all these losers, is the government channeling more CPF into GIC because it is unable to return CPF members our hard earned savings at 55? Or even all OUR money at 65?
Taking into account other profitable investments, it’s still unlikely for GIC to have made 6.1% annualised return over 20 years. One has to bear in mind that In the real world of investment, it’s easier to lose, say, 70% than make a 70% profit on an investment within the same time frame.
Before critics claim that I am cherry picking, they should first scrutinise GIC’s portfolio of listed securities. If not, isn’t it better not to speculate on my attempts to highlight the need for transparency?
To better understand GIC’s ‘investment model’, all we need to do is look at its biggest boo-boo – underwater-for-8-years UBS. GIC did earn some coupons and peanuts dividends of about $3 billion. However, GIC’s 6.38% stake/246 million shares (6.38% X 3.85 billion total UBS shares) has a market value of about CHF4 billion/S$5.6 billion based on its current share price CHF15.1. This translates into an unrealised loss of about S$5.4 billion after 8 years! (CHF1 = S$1.4)
When unrealised losses could amount to several billions in ONE investment, should CPF members continue to hope that smaller investments fare any better? If GIC was so reckless as to throw $14 billion on a single bet, couldn’t it have also done likewise with smaller bets?
GIC’s investment in Citigroup and its public impression of a fund manager par excellence need clarification. Credit should be given where it is due but GIC actually profited from its Citi investment through pure luck.
Bear in mind that shortly after GIC placed its US$6.88 billion Citi bet:
– Citi was facing bankruptcy and had to be bailed out by the US government.
– Although GIC had invested in 7% Citi notes in perpetuity, Citi was not able to continue paying the 7% dividends.
– It was due to the US government bailout that GIC’s original conversion price of US$26.35 was miraculously reduced to US$3.25.
– The US government indicated that taxpayers would guarantee up to US$306 billion of Citi’s toxic assets to keep Citi afloat.
– Did GIC foresee Citi’s collapse,
– its inability to continue paying 7% dividends,
– the US government bailout and
– the reduction of Citi’s conversion price from US$26.35 to US$3.25?
If nothing had gone as planned, wasn’t GIC’s gain from Citi based on pure luck?
Chart source: markets.ft.com (share price should be divided by 10 due to a 1 for 10 reverse stock split in 2011)
If Citi was such a good investment as claimed, why is its share price still languishing 84% below GIC’s original conversion price of $26.35 after 8 years? Based on fundamentals, Citi is no doubt a lousy investment. Instead of taking a disciplined approach and channel capital to more productive investments, Singaporeans are told we need to have faith and continue loving Citi for 20 to 30 years!
At best, GIC’s two biggest investments have earned zero return for 8 years. Will CPF rules be tweaked to trap more of our CPF because GIC has tens of billions in assets yielding zero or negative return?
GIC has become extremely reckless because there has been no accountability. Every investment is subject to risks but it is not acceptable for GIC to take concentrated positions for the simple reason that there’s no Plan B if it makes a mistake. Could GIC afford to lose 50% or S$12.5 billion on both investment? If GIC was not prepared for such a loss why did it risk $25 billion of our CPF and reserves by investing in Citigroup and UBS?
The public should not lap up all the propaganda about GIC’s investment prowess because a lot of it’s ‘investments’ are simply bets which could go either way.
The manner in which GIC has been speculating with our CPF and its refusal to be transparent leaves me to conclude that a lot of our CPF investments are submerged somewhere in the … Mariana Trench. I really have no more trust in GIC managing my CPF.