All overseas investments by GIC – mostly using our CPF – are subjected to volatile exchange rate movements. Some instances below.
Over 15 years from September 2003 to September 2018, 1 billion pounds invested in UK assets would have been reduced by 36% to only 640 million pounds. (Link)Over the same period, an Indian investment would have suffered 50% exchange rate losses. (If the share price of an Indian company has increased by 50%, it means there is no capital gains after conversion to Singapore dollar)An Indonesian investment had it worse, losing 55%.
The Singapore dollar has appreciated against most currencies over past decades and this has led to massive exchange rate losses,should GIC divest its assets: GIC has billions in unrealized forex losses.
Due to negative forex movements, dividends paid by overseas companies have also been reduced significantly.
There was no way GIC could have returned CPF members’ retirement savings – as promised – at 55. Today, GIC is not even able to return all CPF monies even at 65!
CPF rules will continue to be tweaked to trap increasing billions in CPF monies to prevent funds outflow. The CPF scheme has now morphed into the mother of all Ponzis.
So long as PAP continues to control Parliament, the true state of GIC’s finances will be concealed.