GIC’s UBS investment possible losses may be the largest but there are numerous undisclosed mini UBSes.
The government must cease disseminating half-truths to impress Singaporeans that all is well at GIC when it is clearly not. For example, the massive UBS loss should be acknowledged individually and not linked to another investment gain.
Anyway, the investment gain on Citi was pure luck because nobody could have predicted the US government throwing billions of US taxpayers’ money to keep Citi afloat.
Singaporeans should take an interest in how our CPF is managed by GIC to better understand why CPF goal posts will be shifted even further in future, eg withdrawal age delayed till 80?, increasing amounts of CPF – above inflation rate – channeled into GIC, all CPF nominees will receive the CPF savings in their CPF accounts unless opted out, etc.
I will deconstruct PAP’s propaganda in this post and following posts for new readers; hopefully more Singaporeans will awaken to the fact that all at GIC is not OK.
A typical example of half-truth reporting by ST’s Cheryl Ong in 2014:
Figures given by ST:
– Selling price (2014) – GBP582.5 million (S$1.2 billion)
– Buying price (2007) – GBP480 million (S$ ????)
The impression given by the article: GIC made BP102.5 million capital gain excluding rental. The reality: GIC’s return on the 7 year investment was peanuts.
Any thinking reader would have suspected something was amiss when ST stated only the selling price in local currency but NOT the buying price. Hmm .. carelessness on Cheryl’s part?
Fact is, the investment had suffered a huge exchange rate loss which wiped out the capital gain in local currency, ie capital gain in GBP = 21% but exchange rate loss = 33%.
ST report ignored Merrill Lynch investment had suffered 33% forex losses.
Even if rental income had been taken into account, the net return from this investment could still have been negative S$37 million, assuming a 3% rental income net of costs.
The government could take me to task by being transparent but of course it can’t embarrass itself.
No fund manager – with government assistance – should mislead stakeholders on individual investments.
There is no Warren Buffet in GIC’s top management, only PAP elites who have relied on tax dollars their entire lives; GIC’s portfolio therefore consists of numerous underwater investments.
Few examples of how GIC has lost our CPF monies – real fast – below:
* GIC likely to have reduced a substantial holding. markets.ft.com
More details of GIC’s speculation at Singaporedesk (above chart based on incomplete info I could find)
From UK and Australia to India..
It is obvious that GIC has lost tons of tax and CPF dollars and Singaporeans need to be convinced that other investments have offset these losses.
It would take a large number of investments with outsized gains to offset the losses but they seem non existent.
So, how the hell did GIC’s portfolio earn a long term return of 6% after all these massive losses? Why does GIC need to hide behind half truths and propaganda instead of being upfront with Singaporeans, especially CPF members?