Contrary to government propaganda, Temasek is actually taking high risk with our reserves. A look at its holdings and transactions in Alibaba, with reference to other companies in its US listed portfolio, confirms this.
It was recently reported that as at end September, Temasek held a balance of 39.6 million Alibaba ADRs after having disposed some 14.5 million ADRs. link During the previous quarter, Temasek added 6.5 million ADRs. Transactions in Alibaba alone seem to dictate the profitability of its entire US listed portfolio.
Transactions in Alibaba since 2014
Hundreds of million$ could be made or lost in a single transaction involving Alibaba but this is considered “portfolio rebalancing from time to time”? link
Portfolio rebalancing = A single transaction with hundreds of million$ in profit/loss
There is obviously an element of speculation in investing but what is clearly wrong with Temasek’s model is that it has put too many eggs in Alibaba’s basket. Recall that Temasek had also put too many eggs in Barclays and Merrill Lynch and lost a total of more than US$5 billion during the GFC. link
To put Alibaba investment into perspective, Temasek held 31 US listed stocks valued at $12.442 billion as at end September. link At US$3.68 billion, Alibaba accounted for 30% of Temasek’s portfolio.
But what is shocking – Alibaba’s value is higher than the 27 cheapest stocks combined. To top that, Alibaba is an extremely volatile stock. So long as Temasek punts and makes money on Alibaba, it really doesn’t matter if the rest of its ‘investments’ don’t perform.
And there are many investments which have been submerged for a long time. Is Temasek’s exit plan for them “wait till kingdom come”? Examples:
The issue with Temasek’s investment model is that it cannot cut losses as the biggest shareholder. It’s an uncalled for make or break situation, usually the latter.
Many investments appear to be hopeless as the US stock market index has been making new highs throughout 2016. How did Temasek manage to pick so many losers?
Temasek needs to be checked by Parliament by disclosing every investment. Our reserves belong to every citizen, not Temasek or PAP.
As Temasek continues with its reckless management of our reserves, it appears to have not learnt any lesson from gargantuan losses incurred during the GFC.