GIC, Temasek & MAS 01 (May 08 - Aug 09)

[millionairemind]

Temasek Wants to Lift Investment in Merrill, Chairman Says

By Jean Chua and Chen Shiyin

Aug. 21 (Bloomberg) -- Temasek Holdings Pte, the biggest shareholder of Merrill Lynch & Co., said it wants to lift its stake in the U.S. securities firm as it expects the investment will boost the value of its portfolio in the ``long term.''
Temasek, Singapore's state-owned investment company, paid $5 billion for a Merrill stake in December, and said last month it's committing a further $900 million. Temasek's assets rose 13 percent to S$185 billion ($131 billion) in the year ended March from S$164 billion a year earlier, Chairman S. Dhanabalan said.

``If there's an opportunity, we would like to look at it,'' Dhanabalan, 71, said in a speech today. ``Whether we do it depends on our assessment and risk diversification.''

Merrill's shares have fallen 55 percent since Dec. 24, when the third-biggest U.S. securities firm first announced Temasek's investment. Temasek is seeking to raise its overseas investments to diversify beyond Singapore, where it already controls six of the city's 10 biggest publicly traded companies by market value.

Temasek's agreement to put money into Merrill last month came after the Singapore fund manager got compensated for its initial investment. Temasek said it will use a $2.5 billion so- called reset payment for losses from its earlier purchase toward buying $3.4 billion of Merrill stock. Merrill said at the time it will book the reset as an expense, as well as $5.7 billion of additional writedowns.

The purchase would push Temasek's stake beyond the 10 percent limit for foreign investors. A portion of its new stock requires regulatory approval, Temasek said.

`Long-Term Investor'

``We're a long-term investor and we're not a conventional investor in the public markets,'' Dhanabalan said. ``We ride out the ups and downs of the market. But we certainly look at what the returns of the public markets are.''

Temasek, which took over state assets such as shipyards and an airline three decades ago, posted an average 18 percent annual return since its inception, he said. Its biggest investments in the city-state include Singapore Telecommunications Ltd., Southeast Asia's biggest phone company, and DBS Group Holdings Ltd., the region's largest bank by assets.

``One has to believe in investing in the longer term, whether locally or globally,'' said Tan Teng Boo, who helps oversee about $250 million at Capital Dynamics Asset Management in Kuala Lumpur. ``The pessimism driving the Western financial institutions down is so extreme right now that for longer term investors like Temasek it does make sense to get some exposure.''

Sovereign wealth funds make up 2 percent of the world's stock and bond markets, Dhanabalan added, and investors ``overestimate'' them. There's also a perception these funds aren't set up just to maximize returns because of a lack of governance and transparency, he added.

Temasek is often considered Singapore's second sovereign wealth fund. Government of Singapore Investment Corp., or GIC, manages more than $100 billion of the country's reserves.

[millionairemind]

Temasek Says Credit Crunch Will Last Two More Years (Update2)
By Jean Chua and Haslinda Amin

Aug. 26 (Bloomberg) -- Temasek Holdings Pte, Singapore's $130 billion sovereign wealth fund, said the global credit crisis will last two more years, drying up investment opportunities and constraining economic growth.

``It's going to be very difficult to predict whether we're in the beginning, the middle or the end,'' Michael Dee, Temasek's senior managing director of international, said in a Bloomberg Television interview. ``It may end sooner, it may go out of the 24-month window, but the other thing I would say is it's not just subprime; it can affect credit cards and other asset classes.''

Full story
http://www.bloomberg.com/apps/news?pid= ... refer=asia

[LenaHuat]

This is a pretty neat comparison but are the numbers correct

Government-owned investment vehicles such as Temasek and its bigger sister agency, Government of Singapore Investment Corp (GIC), control over $2 trillion in assets -- more than the combined value of the main German and Australian stock indexes -- and are expected to grow to $12 trillion by 2015.

[kennynah]

if these numbers are correct, then i am very concerned that there are singaporeans who cannot afford rental flats, people who beg on streets.... where's the money ???

[millionairemind]

Temasek defends investment strategy
By John Burton in Singapore

Published: August 26 2008 06:03 | Last updated: August 26 2008 19:04

Temasek Holdings, the Singapore state investment agency, on Tuesday defended its strategy of investing in Merrill Lynch and Barclays, insisting that it saw value in US and UK financial stocks in spite of setbacks from the credit crunch.

However, the group warned that it expected market volatility in the months ahead and there was a risk it could suffer losses in asset values during the current financial year, which ends in March 2009.

“The fallout of the credit crisis will continue to dampen the global economy over the next 24 months, with sharply escalated oil and food prices beginning to test inflation expectations,” S. Dhanabalan, chairman, said in the agency’s annual report.

His comments came as Temasek reported a doubling of net profits to a record S$18.2bn ($12.8bn) last financial year as it increased asset sales to counter global market turbulence.

Temasek agreed in July 2007 to take an initial 2 per cent stake in the UK’s Barclays and in December last year took a 9.5 per cent stake in Merrill, the US investment bank.

Michael Dee, the head of Temasek’s international division, said financials were “a very good proxy for economic growth”. He said Temasek believed it was investing in “turnaround champions for future growth” with its stakes in Merrill and Barclays.

Although the share prices of Merrill and Barclays have fallen sharply since Temasek’s initial investments in them, Manish Kejriwal, Temasek’s international investment chief, said the agency “concentrated on the US and the UK because we see value . . . But we can’t time these things perfectly.”

The Merrill and Barclays investments represented a shift away from Temasek’s focus on Asia, with the majority of net investments made outside the region for the first time.

“It may be premature to say that we have a global profile, but that’s the direction we want to move [in],” Mr Dee said.

The investment agency also disclosed that it received a S$10bn capital injection last year from Singapore’s finance ministry, its sole shareholder, which helped boost its net portfolio value by 13 per cent to S$185bn.

The capital injection came at the start of Temasek’s last financial year in April 2007 and occurred before the start of the global credit crunch.

Temasek said on Tuesday it increased its exposure to financial groups to 40 per cent of its portfolio, up from 38 per cent.
Copyright The Financial Times Limited 2008

[ishak]

Temasek warns of lean years as returns dwindle
It flags stagflation risk; its 7% total shareholder return on portfolio lowest in recent years Business Times, 27 Aug 2008

Temasek Holdings has warned of a growing danger that global economic growth could stall as the fallout from the credit crisis spreads around the world, with possible stagflation posing a severe risk for years to come.

Temasek's own vast portfolio of investments was buffeted by the turmoil that swept financial markets since the start of the crisis last year.

By market value, the total return to Temasek's sole shareholder - the Finance Ministry - for the year to end-March fell to just 7 per cent, from 27 per cent a year earlier.

Economic profit or wealth added - which Temasek uses internally to gauge its returns above a risk-adjusted benchmark - was a negative $6.3 billion, the first time in five years it fell below the cost-of-capital hurdle. A year earlier, wealth added was $23.4 billion.

By one measure, the market risk of Temasek's portfolio rose 67 per cent over the year to end-March, reflecting the 'severe stress' in global financial markets, according to its latest annual report.

Group net profit for Temasek for the year to end-March doubled to a record $18.24 billion from a year earlier, boosted by strong operating performance at its portfolio companies and divestment gains from its asset sales.

Under standard accounting rules, the consolidated net profit includes Temasek's share of profits from companies in which it has a stake of 20 per cent or more, but does not directly reflect its share of the profits or losses of firms in which Temasek has a stake below 20 per cent. Profits from Singapore's DBS Group, of which Temasek owns 28 per cent, would be included, while profits from the UK's Standard Chartered Bank, in which Temasek has a 19 per cent stake, would not.

'The credit crisis is not over - we expect to see further contagion in the real economy in the US, Europe and also Asia over the next 24 months,' said Temasek chairman S Dhanabalan in the 2008 Temasek Review published yesterday.

The fallout from the credit crisis 'will continue to dampen the global economy' for the next two years, he added.

The 7 per cent one-year return to the government - which includes dividends paid by Temasek to the government net of new capital injections - is the lowest since Temasek started publishing its annual report in 2004, when the return was 46 per cent.

Temasek's portfolio performance over longer periods, however, remains strong, with compounded annual returns of 23 per cent over five years, 9 per cent over 10 years, and 18 per cent since Temasek's inception in 1974.

But Mr Dhanabalan was cautious on the outlook. 'We are concerned with the emerging risks of stagflation. This presents huge socio-political as well as economic risks in the next three to five years,' he said.

Bold policies by regulators in the US had averted a major systemic failure, but 'the risks of stagflation have become more apparent with the twin bogeys of high oil and food prices', he added.

Still, 'there may be opportunities as imbalances are corrected', although such opportunities may be limited if stagflation - a period of stagnant economic growth coupled with high inflation - does set in, he added.

During the year to end-March, Temasek sold $17 billion worth of assets, including some $12 billion in Asia, 'as we anticipated a massive structural adjustment', said Mr Dhanabalan.

In April last year, Temasek also received an injection of new capital from the government, which boosted its portfolio value by $10 billion, net of dividends paid to the government. An undisclosed dividend amount is set yearly by the Temasek board, said Michael Dee, Temasek senior managing director, international, at a media briefing yesterday. Mr Dee, a former investment banker, recently joined Temasek from Morgan Stanley.

[ishak]

Temasek stable hit by plunging markets
Half its investments in listed companies yield negative FY2008 returns
BT, 27 Aug 2008

Many of Temasek's investments were poor performers last year, giving negative returns, in line with plummeting stockmarkets.

As measured by total shareholder return (TSR), 12 or half of its 24 investments in listed companies reported negative TSR on a one-year basis.

Not surprisingly, six of the 12 with negative one-year TSR were financial institutions, including homegrown DBS Group Holdings which posted a negative TSR of 12.4 per cent.

Temasek's investments in financial services make up 40 per cent of its total $185 billion portfolio.

Three of the 12 - Barclays plc, Merrill Lynch and Chartered Semiconductor Manufacturing - had negative TSR on a three-year basis. According to Bloomberg, Merrill shares have dropped 24 per cent from the time of Temasek's original investment in December 2007 to March 31, 2008.

At end-March, Barclays shares had declined 38 per cent since Temasek and China Development Bank announced plans to invest in the UK bank on July 23, 2007.

Temasek's investments in eight unlisted companies fared much better with only one, MediaCorp, posting a negative TSR of 5.1 per cent.

Temasek's TSR contracted to 7 per cent by market value, including dividends for the year ended March 31, 2008, from 27 per cent a year ago.

But it wasn't just the banks which performed poorly.

Non-financials Singapore Airlines, CapitaLand, Sembcorp Industries, Chartered, STATS ChipPac and Fraser and Neave also posted negative TSRs.

Other banks which reported negative TSR included China's third largest bank, Bank of China; South Korea's Hana Financial Group; and India's ICICI Bank.

Those in positive TSR territory were Temasek's investments in China Construction Bank, Pakistan's NIB Bank, Standard Chartered plc and the two Indonesian banks, Bank Danamon and Bank Internasional Indonesia (BII).

NIB Bank, in which Temasek owns 63 per cent, delivered the second-highest one-year TSR of 132.7 per cent. Temasek bought into NIB in May last year. The Pakistani bank in 2007 posted a loss of 204 million rupees (S$3.8 million).

BII, which Temasek had tried to sell to Maybank but only to see the deal stall, posted the highest one-year TSR of 146.8 per cent.

Another sterling performer was Singapore Telecommunications, Temasek's biggest investment with a 55 per cent stake. SingTel, also Singapore's largest stock by market capitalisation, posted a one-year TSR of 26 per cent.

Although SingTel's stock price has fallen this month since it reported a 5.3 per cent drop in first-quarter profit for the three months ended June 30, to a two-year low of $878 million, it is still outperforming the market. Year-to-date, SingTel has fallen 13.25 per cent, compared to the Straits Times Index's 21.9 per cent drop.

[millionairemind]

If ML goes the way of bear sterns, we are all screwed... cos' ERP will be $10/entry..

Temasek Has `Great Confidence' in Merrill's CEO Thain (Update2)
By Jean Chua and Haslinda Amin

Aug. 27 (Bloomberg) -- Temasek Holdings Pte, Singapore's $130 billion sovereign wealth fund, said it has ``great confidence'' in Merrill Lynch & Co.'s Chief Executive Officer John Thain and plans to raise its stake.

Temasek, Merrill's biggest shareholder, received U.S. antitrust approval yesterday to increase its holding in the third-largest U.S. securities firm from 9.4 percent. Temasek said it wants to lift it to between 13 percent and 14 percent.

Merrill has a ``great franchise which has existed through many crises through a long period of time,'' Michael Dee, Temasek's senior managing director of international, said in a Bloomberg Television interview yesterday.

Temasek invested about $5 billion in Merrill since Dec. 24 after Thain, 53, replaced Stan O'Neal, who was ousted following the firm's biggest quarterly loss in its 93-year history. Merrill's writedowns make up a 10th of the more than $500 billion of credit losses by banks amid the subprime meltdown.

``The bottom line is financial institutions are still asking for more capital,'' said Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors, which manages about $108 billion. With sovereign funds, ``there's still plenty of capital out there, so they're looking for somewhere to park that money.''

Merrill spokeswoman Danielle Robinson declined to comment yesterday, referring calls to Temasek.

Shares Fall

Temasek, wholly owned by Singapore's finance ministry, has been increasing investments in global financial services companies to take advantage of a stock-market slump that erased about $10 trillion in market value in the past year. The MSCI World/Financials Index has dropped 33 percent in the period.

The sovereign fund, run by Chief Executive Officer Ho Ching, 55, said last month it was putting a further $900 million in Merrill after it was compensated for the initial investment. Temasek said it will use a $2.5 billion reset payment for losses from its earlier purchase toward buying $3.4 billion of Merrill stock, and the securities firm will book the reset as an expense.

Merrill shares have fallen 55 percent since Temasek's first investment on Dec. 24. The stock fell 10 cents to $24.10 in New York Stock Exchange composite trading yesterday.

Temasek, which yesterday said profit doubled in the year ended March, said its decision to further increase its stake was based on Thain and his management team.

Diversity of Banks

``We had great confidence in John Thain; we had great confidence in the rest of the management and the board,'' said Dee, a former Morgan Stanley banker who joined Temasek this month.

At least a dozen U.S. lenders and credit unions have been closed by state and national regulators since 2007 as mortgage markets collapsed. Columbian Bank and Trust Co. of Topeka, Kansas, closed Aug. 22, becoming the ninth U.S. bank to collapse this year. Columbia had $752 million in assets and $622 million in deposits.

Temasek is confident about its Merrill investment because the U.S. banking system is diversified enough with thousands of lenders to handle the failure of a small group, Dee, 52, said.

``The strength of the American financial system is the diversity and that no single bank or no single group of banks is really that large,'' he said.

Banking Stakes

The U.S. Federal Trade Commission said in a statement that it cleared the transaction early, letting Temasek make an investment. Thain, the former Goldman Sachs Group Inc. president who also ran the New York Stock Exchange, was named chief executive officer of Merrill in November, the first outsider to lead the firm. His appointment was effective Dec. 1.

Temasek is also the biggest shareholder of London-based Standard Chartered Plc and Singapore's DBS Group Holdings Ltd., and owns stakes in Barclays Plc, India's ICICI Bank and lenders in Indonesia, South Korea and Pakistan. The banks make up 40 percent of its portfolio.

Chairman S. Dhanabalan said on Aug. 21 Temasek may buy more shares in Merrill and expects the stake will boost the value of its portfolio in the ``long term.''

Banks and securities firms have raised more than $350 billion in the past year after the writedowns and credit losses caused by the collapse of the U.S. subprime mortgage market, data compiled by Bloomberg show.

[-dol-]

MM, I share your sentiments. And it won't just be ERPs...

[kennynah]

if one has seen Thain spoken before, u will realize that he is atypical of an american. he speaks as if a script has been imprinted in his mind. very methodical, very diplomatic and very concise and with very carefully chosen words. he appears very intelligent as well.
maybe tamasik kana bluffed by this portrayed image ....hahahaha...