GIC should disclose other underwater CPF investments, don’t impress Singaporeans with half truths and propaganda

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.

​At 5%, GIC could have made about S$117 million or $17 million a year over 7 years. An annual return of 1% is something to shout about? 😦

But since it had invested at the height of the stock market bubble when yields were compressed, GIC had likely lost money on another billion-dollar investment. 😦

CPF members have been had. 😦

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:
Serco Plc

* GIC likely to have reduced a substantial holding. markets.ft.com
London Mining

More details of GIC’s speculation at Singaporedesk (above chart based on incomplete info I could find)
Arrium

From UK and Australia to India..
ICSA

Tulip Telecom

..and of course it has lost tons of money in other countries. (below).

There are many more losers than those companies in the list above.

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?

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One Response to GIC should disclose other underwater CPF investments, don’t impress Singaporeans with half truths and propaganda

  1. Confused says:

    “In investments as in life, you win some and you lose some.
    That was certainly the case for GIC, which said earlier this week that it had pared its stake in Swiss private bank UBS, at what could be a loss of more than US$3.5 billion (S$4.8 billion).
    GIC did not disclose the loss.”

    Extracted from the link: http://www.straitstimes.com/business/banking/ups-and-downs-of-gics-stake-in-ubs

    I am amazed Why the report above made no attempt to find out the loss as accurately as possible but instead played with words?

    “Could be a loss of more than US$3.5 billion (S$4.8 billion)” could mean the loss can also be as high as US$4.0, or can even be US$5.0?

    What about in S$ terms taking into consideration of US$1~S$1.7 in 2007 and it is about 1.4 now?

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