20160705 Will Temasek keep Standchart investment for only 30 years or 300 years?

Ah Kow: Bro, should be quite interesting when Temasek announce its results this week. Last year up $43 billion because every stock market also up. But this year stock gos stun and our China investment in ICU.

Ahmad: I also read a bit I know la. Central banks support market by printing more money. If not, economy down, more people no job and everywhere also riot.

Ah Kow: Except Singapore – all the Indian rioters went back already. Our laws so strict you think Singaporeans dare to riot meh? Haha.

Arumugam: Reuters article specially mentioned Temasek’s Standard Chartered as the worst investment. But 10 years ago when Temasek wanted to invest in Standchart, Simon Israel said Temasek was “privileged to have this opportunity to invest in a unique franchise ..”. Look at this chart and tell me whether was is a privilege or Simon talking cock.

Arumugam: A few year later, Temasek bought additional 6% near the high and then kena forced to subscribe to 3 rights issues. All these were not in Temasek’s game plan.

Standchart investment faces huge currency loss

Source: fxtop.com

Ah Kow: Wa lau eh, like that means kena slap left and right. So how much have we lost actually, bro?

Arumugam: OK this is only a very rough estimate:

Average price = 1200 pence per share
Total dividends = 300 pence
Current share price = 570 pence
Paper loss = 330 pence
Investment (less dividend) = GBP 4.65 billion

If we sell the shares at 36% loss, we get back only GBP 2.97 billion. Then if convert to S$ with 28% loss, we get back only GBP 2.14 billion. That means we are sitting on a paper loss of almost S$8 billion! Looks like Temasek will beat its previous record and maybe also achieve a world record for investment losses. Problem is it’s our money.

Ahmad: Cannot be leh. If that’s the case, why Parliament so silent like ghost town?

Ah Kow: Why not when you know I know who is running the show. Haha Not only driver quiet in Parliament, co driver kena slap until dare not ask hard truth questions anymore.

Ahmad: But they all got currency protection right? I remember some commenter said got do hedging.

Arumugam: Since Temasek takes very high risks, why bother to hedge? Look at so many investments it’s double or quits. According to this Reuters article, “The 10 percent drop in sterling against the Singapore dollar …. has also depressed the value of the Standard Chartered stake”. So do you think they hedged their bets?

Ah Kow: Bro, correct me if I am wrong, I don’t think Temasek knows anything about investment. First rule is never get too attached to an investment, like it’s your wife or girlfriend right? And rule 2 is know when to cut loss.

Arumugam: Talk is simple but when Temasek bought 11.5% from tycoon Khoo and increased to 19% the following 2 years, it had no intention of cutting loss. Then later kena forced to subscribe to rights, pump in more billions, how to cut loss? Imagine news splashed all over the world “Temasek kena slapped by new world record investment loss in Standchart”, PAP will become so sia sway until nowhere to hide their faces. This cannot be allowed to happen and they will continue pumping our reserves into this bad investments.

Ahmad: I think I know what you mean. But some wise leeder once defended lousy investments in UBS and Citigroup and said GIC is a long-term investor: can keep lousy investments for 20 to 30 years.

Arumugam: People who say this sort of things are fools with big ego, not investing with their own money and simply do not understand the meaning of risk. Temasek should not have been too cock sure that Standchart will always be a good investment by looking at the rear view mirror. What is past is over and many banks which performed very well in the past have folded, eg 200 plus years Barings also sayonara. Our scholars should be looking ahead but they always look at past performance and anyhow assume previously good banks will be around forever.

Ah Kow: Temasek also always use our tax dollars to punch above its weight but kena punched by Standchart and Chinese banks now. You think gahmen increasing car park charges because of investment losses?

Arumugam: Nobody really knows how bad our investment returns are. One thing for sure, Temasek is now stuck with Standchart for good. There is no buyer willing to buy such a large stake and even news of Temasek’s intention to sell will cause Standchart to collapse.

Ah Kow: Like that jia lat leow. After 10 years, Temasek still cannot sell Standchart anytime, I think wise leeder said 30 years also not possible. You think Temasek will need to keep Standchart for 300 years?

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2 Responses to 20160705 Will Temasek keep Standchart investment for only 30 years or 300 years?

  1. P.c. says:

    Temasek is just a investment company, the MAS can do a favour is to devalue sing dollar to offset some of exchange loss to make it nicely in book.

  2. Xmen says:

    It looks like Temasek just lost a whole lot of taxpayers’ money. I know they always claim they do better than others with specific examples. But they should really compare themselves to Harvard endowment fund, Norway pension fund, or CALPERS investment fund. I don’t believe any of them do worst than Temasek.

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