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

[HengHeng]

i thinking of buying some stocks liaoz. . but will update in time to come.

[ishak]

Temasek's stake in Merrill
BT, 17 Sep 2008

IF this were a boxing match, it could be said that Temasek Holdings was saved by the bell. Once sitting on huge paper losses, the Singapore investment fund can instead now look forward to a potential gain on its investment in Merrill Lynch. But, while it has been spared further pummelling, for now at least, much uncertainty still surrounds the stake.

Bank of America (BOA) is buying Merrill for US$50 billion or US$29 per share by exchanging 0.8595 BOA common stock for each Merrill share. Temasek is the single largest investor in Merrill with a stake of about 14 per cent after injecting some US$5.9 billion, or paying an average US$23.11 a share since last December.

It stands to reap a gain of about US$1.5 billion if it takes up the BOA offer. Temasek would also gain a stake in a global financial giant with a more diversified business than investment bank Merrill. That is not a bad result, although it is more the result of fortuitous circumstance than of a deliberate investment strategy. And while the potential upside can be large, right now the situation remains on edge.

For one thing, Temasek's gains will only be intact if BOA shares hold their ground. But on Monday, following news of the purchase of Merrill, BOA shares fell 21 per cent or US$7.19 to US$26.55. It's impossible to make a call on BOA's share price in the near term, given the volatility in the markets. Falls of such extent can quickly turn gains into losses, if only on paper. Merrill is also facing a shareholder suit claiming that efforts to sell the company to BOA were unfair to shareholders.

Long-term, the question is how Merrill will change BOA. The acquisition has already led Standard & Poor's to downgrade its ratings for BOA. While Merrill will give BOA a large brokerage franchise, it will also introduce more residential housing risk to BOA, notably in the form of its sizeable holdings of collateralised debt obligations (CDOs) backed by sub-prime residential mortgage-backed securities, at a time when the US mortgage market continues to slump. So the possibility of future writedowns cannot be ruled out.

The acquisition also takes place shortly after BOA's July acquisition of troubled mortgage lender Countrywide Financial Corp, which will place further pressure on BOA's capital. And while BOA has a history of successfully integrating bold acquisitions, the purchase of Merrill carries integration risk, particularly since it comes during a period of severe market turmoil. BOA has never integrated an investment bank the size of Merrill.

So the jury is still out on Temasek's investment in Merrill. If anything, the events of the past week have demonstrated again the risks of buying too early in a prolonged market downturn. The fall of Lehman Brothers and Merrill Lynch is also a reminder that in such an environment, even buying prestigious brand names provides no guarantees.

Good Reminder:
If anything, the events of the past week have demonstrated again the risks of buying too early in a prolonged market downturn. The fall of Lehman Brothers and Merrill Lynch is also a reminder that in such an environment, even buying prestigious brand names provides no guarantees.

[ishak]

GIC says to explore Morgan Stanley
Reuters, 18 Sep 2008

The Government of Singapore Investment Corp (GIC), the world's second-biggest sovereign fund, said it will explore investing in Morgan Stanley if it is approached.

'GIC explores all opportunities when approached,' said Jennifer Lewis, a spokesman for the Singapore state fund, in an email when asked if it is considering an investment in the US investment bank.

Morgan Stanley, which saw its stock pummelled on Wednesday on worries it may not survive the credit crunch, has held preliminary takeover talks with Wachovia Corp, a person familiar with the situation told Reuters.

Separately, CNBC reported that Morgan Stanley was having discussions with CITIC, the China-controlled conglomerate that owns brokerage firm CITIC Securities.

Morgan Stanley executives could not be reached immediately for comment on these talks.

[winston]

GIC has large cash pile, sees opportunities in US

(Updates with details from press conference) By Kevin Lim and Saeed Azhar

SINGAPORE, Sept 23 (Reuters) - Singapore sovereign fund GIC said it still had plenty of cash after its multi-billion dollar investments in UBS and Citigroup and saw opportunities in the United States amid the financial storm.

The Goverment of Singapore Investment Corp, which manages assets estimated at around $300 billion, held 44 percent of its portfolio in stocks and about 7 percent in cash at end-March 2008, it said in its first-ever annual report on Tuesday.

"Problems in the U.S. would present very interesting opportunities in impaired assets," Group Chief Investment Officer Ng Kok Song said at a press conference, although he added the investment environment was the most challenging since the fund was founded in 1981.

GIC released its first annual report after Singapore agreed with Abu Dhabi and the U.S. to a voluntary set of principles for sovereign funds, aimed at allaying Western fears that their investments are politically motivated.

GIC painted a bleak outlook for the global economy, saying efforts by the U.S. government to bail out its financial sector would need time to take effect.

"We should not assume that the worst is over and we continue to be watchful and prudent in our assessment of the economic risks and in our investments," said Deputy Chairman and Executive Director Tony Tan.

Ng said GIC planned to increase its exposure to emerging economies, "particularly Asia because this is where the growth potential is and this our backyard".

"We are seeing a lot of opportunities both in public markets as well as private markets such as real estate," Ng added.

GIC, the world's third largest sovereign wealth fund according to Morgan Stanley, has emerged in the limelight in recent months following its high-profile investments in Citigroup and UBS .

The fund, which manages the bulk of Singapore's foreign currency reserves, says it manages well over $100 billion although many analysts say the figure is around $300 billion.

Tan said GIC released its first annual report because it believed "such clarity and disclosure will benefit both the Singapore public and the international investment community".

PERFORMANCE GIC said in its annual report that it achieved an average real return of 4.5 percent per annum in Singapore dollar terms over the 20 years to March. In nominal terms, its Singapore dollar returns was 5.8 percent, down from over 8 percent in 2005.

The fund's nominal return over the same period, when measured in U.S. dollars, was 7.8 percent, it added.

GIC said 34 percent of its portfolio was invested in the United States, another 35 percent in Europe and 23 percent in Asia. The Americas and Australasia accounted for the remainder.

The state investor also said that 26 percent of its portfolio was in in fixed income and 23 percent in alternative investments such as real estate and hedge funds.

Ng said GIC suffered some "mark-to-model" losses from its investments in UBS and Citigroup convertible notes, but believed the two would generate good long-term returns.

The firm owns convertible notes that, if exercised, would give it about 9 percent stake of Switzerland's UBS and around 4 percent of Citigroup.

Ng also said the firm's losses from its investments in the two banks had been minimised through reset clauses in the original investment agreements.

Analysts said sovereign funds may become more cautious.

"They had invested early on in the crisis, but their first bite had been costly because markets fell," said Song Seng Wun, Singapore-based senior economist at Malaysian investment bank CIMB, when asked about GIC.

"With the current uncertainty I think most of the sovereign wealth funds will be more selective in looking at what's on their plate. There will be opportunities in OECD countries which deflate from the excesses of the past," he added.

[winston]

Singapore's GIC Turns to Emerging Markets for Returns
By Chen Shiyin and Shamim Adam

Sept. 23 (Bloomberg) -- Government of Singapore Investment Corp., overseeing more than $100 billion of reserves, is turning to emerging markets and private equity to boost returns after cutting back stocks and investments in developed nations.

The fund, known as GIC, raised holdings of natural resources and hedge funds, and cut bonds to a quarter of its portfolio from more than three quarters 25 years ago, it said. Stock sales since mid-2007 enabled it to spend $18 billion on stakes in UBS AG and Citigroup Inc. in the past year, and it's holding more cash.

``We see a more challenging investment environment,'' Chief Investment Officer Ng Kok Song said today. ``The powerful trend of disinflation that propelled the global capital markets over 25 years seems to have ended.''

GIC, whose chairman is Singapore Minister Mentor Lee Kuan Yew, said annual returns in the past 20 years averaged 7.8 percent in U.S. dollar terms, compared with 7 percent for the MSCI World Index. The fund wants a longer-term investment performance after the 1997 Asian financial crisis, 2001 Internet slump and the credit crisis damped returns in recent years.

The subprime meltdown sent the MSCI World Index to the lowest in three years, wiping out almost $14 trillion from global stocks this year.

Temasek Holdings Pte, Singapore's state-owned investment company with a $130 billion portfolio, has had an average annual return of 18 percent since it was created in 1974. Norway's sovereign wealth fund posted a 3.6 percent return since 1998, while U.S. billionaire Warren Buffett's investment firm Berkshire Hathaway Inc. gained 21 percent in the past two decades.

`Isn't Exciting'

GIC's return ``isn't exciting at all,'' said Beat Lenherr, who helps oversee more than $20 billion of assets as chief global strategist at LGT Capital Management in Singapore. ``The slowdown in the U.S. economy will affect growth in emerging markets and the outlook for earnings.''

UBS shares have fallen 59 percent since GIC announced the investment in December, and Citigroup has declined 26 percent since the government fund's purchase in January, as both banks wrote off almost $100 billion on subprime investments.

Ng, 60, said at a press conference today he's ``confident'' both investments will offer long-term returns, though he admitted the timing of the purchases could have been better. The fund received undisclosed reset payments from the two banks to compensate for the decline in the share prices.

`Good Long-Term Bets'

``Sovereign wealth funds like GIC understand that these large banks are good long-term bets,'' said Don Gimbel, a Montana-based senior managing director at Carret & Co., which oversees about $2 billion. ``Like other global investors, sovereign funds have taken big hits in the last 12 months.''

GIC was ``surprised'' at the magnitude of the credit crunch, though it's ``not closing the door'' on opportunities emerging from the crisis, Ng added.

``There are risks stemming from severe macroeconomic imbalances in the world economy, the rising cost of energy and food, and continued de-leveraging of global financial institutions,'' Ng added.

Banks worldwide have reported more than $500 billion in losses and writedowns. The credit crunch led Lehman Brothers Holdings Inc. to file for bankruptcy and forced the sale of Merrill Lynch & Co. to Bank of America Corp. last week.

Holding Cash

GIC's holdings of stocks have fallen to 44 percent of its portfolio from about half two years ago, while its investments in alternative assets such as private equity and real estate rose to 23 percent from 20 percent. Cash made up 7 percent as of March.

``Starting from May last year, GIC has raised substantial levels of cash in anticipation of a crisis in the global credit and housing markets,'' Deputy Chairman Tony Tan said at the briefing today. ``Even after our significant investments in UBS and Citigroup, GIC continues to hold large cash reserves as a strategic safeguard.''

The Americas made up 40 percent of its assets, down from as much as 45 percent two years ago. Investments in Europe rose to 35 percent from 25 percent. Asia now accounts for 23 percent of its investments, with Japan making up almost half of them.

The 20-year returns announced today are part of efforts to disclose more amid rising scrutiny of sovereign funds as they increase investments globally, GIC said. It expects to release its asset allocation and long-term returns every year. GIC last disclosed its returns two years ago on its 25th anniversary.

The average return over the two decades was 5.8 percent in Singapore dollar terms, said GIC, set up in 1981 to manage the city-state's foreign reserves.

Hong Kong's Exchange Fund, the $181 billion pool of assets that backs the city's currency, had an investment loss of HK$35 billion ($4.5 billion) in the first half because of declines in global equities.

Temasek, which led investments in Merrill Lynch and Barclays Plc in the past year, said returns from holdings in publicly listed companies slowed to 7 percent in the 12 months ended March from 27 percent the previous year.

[ishak]

GIC sees Citigroup, UBS investments to perform well
BT, 23 Sep 2008

GIC 'would have liked' the timing of its investments in Citigroup and UBS to be better, but still expects both investments to perform well over the long term, says GIC group chief investment officer Ng Kok Song.

GIC to cut exposure to developed markets
BT, 23 Sep 2008

GIC will continue to increase its investments in Asia and other emerging economies while reducing exposure to developed markets, says GIC group chief investment officer Ng Kok Song.

GIC rate of return at 4.5%
BT, 23 Sep 2008

In its first public report on the management of the Singapore government's investment portfolio, released on Tuesday, the Government of Singapore Investment Corporation Ltd (GIC) has revealed that its annual rate of return over the 20 years to March 31, 2008 was 4.5 per cent in real terms - that is, above global inflation. The GIC's nominal rate of return over the period was 5.8 per cent in Singapore dollar terms and 7.8 per cent in US dollar terms.

GIC has also diversified its asset mix over the period. As at March 31, 2008, 44 per cent of its total investments was in public equities in both developed and emerging markets; 26 per cent was in bonds; and 23 per cent was in alternative investments such as real estate, private equity, venture capital and infrastructure and natural resources. Seven per cent was in cash.

'In recent years we have accelerated the pace of real estate and private equity investments,' GIC noted in the report. At the same time, fixed income investments have been reduced significantly from more three quarters of the portfolio 25 years ago, to about one-quarter.

In terms of geographical distribution, as at March 31, 2008, 34 per cent of GIC's portfolio was in the United States; 35 per cent was in Europe; and 23 per cent was in Asia (including Japan). GIC did not reveal the total size of its portfolio in the report.

In a section of the 48 page report, GIC's Group Chief Investment Officer, Ng Kok Song revealed that 'we were surprised by the onset and magnitude of the market turmoil starting in July 2007.' He added that GIC responded by raising cash as a preliminary measure and then invested directly in convertible securities of UBS AG and Citigroup.

'We also participated in several external funds that invested in mortgage-related securities and corporate leveraged loans, where selling by distressed holders had created compelling value,' Mr Ng pointed out.

[millionairemind]

Published September 24, 2008
GIC eyes distressed assets, says US not out of woods
Its portfolio grows at annualised real rate of 4.5% over 20 yrs to end-March
By CONRAD TAN

(SINGAPORE) The Government of Singapore Investment Corporation (GIC) said yesterday the worst is not over for the US economy despite plans for a sweeping rescue of America's financial system.

And yet, for an organisation like GIC, the global crunch presents its own window of investment opportunities, it said.

'The proposal put forward by the US Treasury announced over the past few days, if approved by Congress, should stabilise the markets to some extent,' GIC deputy chairman Tony Tan said at a news briefing to launch GIC's first-ever annual report.

'However, economic problems still remain. It will take some time for the outstanding issues in the global financial crisis to be effectively resolved. We should thus not assume that the worst is over.'
Ng Kok Song, GIC's group chief investment officer, said that the current deleveraging of the global financial system means that 'many financial institutions will be looking to raise capital and more international institutions soon will need to raise funds'.

GIC had increased its cash reserves to 7 per cent of its assets over the past year which put it in a 'good position to respond to investment opportunities'.

'We can make money from both growth as well as distress,' said Mr Ng. He added: 'We'll invest in Asia for growth, but the problems in the US could present very interesting opportunities of a distressed nature.'

GIC - which manages Singapore's foreign reserves including pension savings - while giving its assessment of the current situation, said that its annualised rate of return over a 20-year period has declined since 2004.

Over the 20 years to end-March, its portfolio grew at an annualised real rate of 4.5 per cent, after adjusting for inflation. Its nominal annual return over the period averaged 5.8 per cent in Sing-dollar terms, or 7.8 per cent in US-dollar terms.

One reason for the decline is that the early years of the 27-year-old GIC - which showed 'unusually high returns' due to the smaller portfolio size and favourable market conditions then - are progressively being excluded from the more recent 20-year periods used to calculate GIC's long-term returns.

Given the present, much larger size of GIC's portfolio and the current problems facing the world economy, 'it is unrealistic to expect that we will be able to achieve such high returns as in the past', Dr Tan said yesterday.

The recent market turmoil is also likely to have taken its toll.

Last December, GIC pumped 11 billion Swiss francs (S$14.26 billion) into UBS, Switzerland's biggest bank.

And in January, GIC injected US$6.88 billion into US banking giant Citigroup, the single biggest investment by a sovereign fund this year.

Since then, the share prices of UBS and Citigroup have plunged amid the worsening turmoil in financial markets.

Mr Ng said the fund manager 'would have liked the timing of those investments to be better', but still expects both investments to perform well over the long term.

GIC did not disclose the exact size of its portfolio, which was estimated by Morgan Stanley in February to be worth some US$330 billion. GIC says only that it invests 'well over US$100 billion'.

This is the first time GIC has published such a report since its inception in 1981. Temasek Holdings, Singapore's other state-owned fund, which manages a separate S$185 billion investment portfolio, has published five annual reports since 2004, detailing the returns earned on its portfolio and the allocation of its investments by geography and sector.

Yesterday, Dr Tan said GIC believes the release of the 48-page report will benefit Singaporeans and international investors. The report, available on GIC's website, shows GIC's portfolio distribution by geography and asset class at the end of March. It also explains GIC's management structure and gives profiles of its board of directors and senior staff.

'I hope that the global community will also appreciate the context and circumstances in which GIC operates, and be assured that GIC has and will always invest for only one purpose - to achieve sustainable financial returns for the government of Singapore's assets,' said Dr Tan.

In a separate statement, the Finance Ministry said yesterday it authorised GIC to publish the report yearly.

[-dol-]

'I hope that the global community will also appreciate the context and circumstances in which GIC operates, and be assured that GIC has and will always invest for only one purpose - to achieve sustainable financial returns for the government of Singapore's assets,' said Dr Tan.

Govt of S'pore's assets?!

I thought these assets belong to the citizens of Singapore?

[kennynah]

hahaha....the wolf's tail occasionally slips out of the sheep's skin....

[ishak]

Maybank fails to complete deal to buy 56% stake in BII
CNA, 27 Sep 2008

Malaysia’s largest bank Maybank appears to have walked away from a deal to buy a 56 per cent stake in Bank Internasional Indonesia (BII).

The stake is now owned by Singapore investment company Temasek Holdings and South Korea’s Kookmin Bank.

In a statement, Temasek said Maybank had not accepted an improved offer which was to have closed on Friday.

That offer would have saved Maybank at least US$165 million.

In March, Maybank said it would pay US$1.5 billion for the majority stake in BII and made a general offer for the remaining shares for another US$1.2 billion.

The purchase has been controversial with some saying Maybank had paid too much.

Detailing the chronology of the latest developments, Temasek said it was informed by Maybank on September 16 that Malaysia’s central bank had reinstated its approval for Maybank to complete the deal.

All parties then agreed to close the transaction by 2pm on Friday.

However, Temasek said it received a fax from Maybank on Wednesday evening asking for negotiations to reduce the purchase price for the majority stake in BII.

Maybank had also asked for a one-month extension to complete the deal by October 26.

Temasek said it was the first time that Maybank was making such requests.

Both Temasek and Kookmin then informed Maybank on Thursday that they were not able to accede to the latest requests.

They said they were ready to proceed with the closing of the transaction at 2pm on Friday as agreed by all parties.

But late on Thursday night, Maybank sent Temasek a second fax saying that the approval by Malaysia’s central bank for the BII deal had come with conditions.

According to Temasek, Maybank had said it needed to extend the closing date for the deal and reach a new agreement on the purchase price.

Maybank also said that unless the central bank’s approval becomes unconditional, it would not be able to complete the transaction.

On Friday morning, Temasek and Kookmin both reiterated they were ready to honour the share sale agreement and proceed with the agreed closing.

Temaesk said it and Kookmin showed up at the closing time of 2pm on Friday and waited until 8pm, but Maybank did not appear.

Temasek then sent a written offer to Maybank shortly before 10pm on Friday, offering to close the transaction as agreed with a rebate of some US$165 million.

Kookmin is also understood to have an offer but no financial details were given.

With no acceptance from Maybank, Temasek said it will exercise all its rights under the original agreement and will explore with Kookmin the various options with regard to their respective stakes.

Reports have estimated that Maybank stands to loose its deposit of some US$140 million now that the deal has been scuttled.

BII currently has a network of 230 branches in Indonesia and about 700 automated teller machines.