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

[Cheng]

National Investments- missing numbers

Monday, 29 September 2008, 8:01 am | 436 views

Leong Sze Hian / Columnist

Revealing the reserves
I refer to the articles “GIC sees good Citi, UBS returns in long run” (ST, Sep 24) and “Tougher investment environment ahead, says GIC in first performance report” (My Paper, Sep 24).

In 2006, it was disclosed that the Government Investment Corporation’s (GIC) annual rate of return for the past 25 years was 8.2 per cent in Singapore dollar terms.

Now, in GIC’s first ever performance report, the annual rate of return for the past 20 years was 5.8 per cent.

So, its 8.2 per cent for 25 years, but 5.8 per cent for 20 years.

[The fund does not make available financial statements but the elder Lee said in 2006 that the fund had earned an average return of 9.5 percent annually over the last 25 years in U.S. dollar terms. Lee Hsien Loong told Reuters in May GIC will not be as open as sister fund Temasek. – Reuters]

The question that may be on everyone’s mind may be - what was the return for the last 25, 26 and 27 years ?

Reporting different time periods may make any meaningful comparison or analysis more difficult.

In the defamation trial against Dr Chee Soon Juan in, it was reportedly said that our reserves was US$ 300 billion.

Since GIC, on September 23, said that its portfolio is well over US$ 100 billion, does it mean that the portfolio shrunk by about US$ 100 billion or more in a matter of months?

I estimate that Temasek’s investments in financial institutions since last year, may have shrunk in value by more than $ 10 billion.

In the interest of transparency, can Temasek and GIC give Singaporeans more details ?

Impact on national reserves

Whilst everybody has been talking about the impact of the financial turmoil on Singapore’s economy, financial institutions, investors, etc, I would like to ask what is the impact on our national savings and reserves?

The finance minister said: “Asian economies will have to tighten monetary policy to fight inflation but this should be a calibrated approach”, at the Association of Banks’ annual dinner on 27 June, 2008.

According to the Ministry of Finance’s web site, assets in the form of cash, government stocks, other investments (quoted and unquoted), deposits with investment agents and securities held as statutory deposits - trust companies, was $ 522 billion, in its statement of assets and liabilities as at 31 March 2007. This is an increase of about 8 and 11 per cent respectively from 2006’s and 2005’s $ 483 billion and $ 437 billion.

Since the Financial Transfers to various funds like the Edusave, Medical, Lifelong Learning, Community Care Endowment Funds, Development Fund, etc, was about $ 4.9 billion for FY 2007, does it mean that in a sense, the Budget surplus was about $ 9.1 billion ($6.4 billion surplus + $ 4.9 billion financial transfers - $ 2.2 billion special transfers) ?

As I understand it, does it mean that some of these funds may not actually be deemed as expenditure, as they merely top-up these funds of which a small component (interest only ?) is actually spent every year ?

For FY 2008, Financial Transfers are estimated to be about $ 10.7 billion, an increase of about 118 per cent over FY 2007.

In this connection, does it mean that transfers to the Development Fund ($ 5.26 billion) to meet future development outlays, may in a sense, be accounting as an expenditure now for an expenditure anticipated in the future - and thus may lead to an under-reporting of the Budget surplus ?

If we add back the transfer to the Development Fund of $ 5.26 billion, does it mean that the estimated FY 2008 budget deficit of $ 0.8 billion, may become a surplus of $ 6.06 billion ?

Are the above conventions used by other countries in their Budgets ?

Deferred projects

I also refer to the article “Govt defers projects worth $ 1.7 b” (ST, Jul 23).

It states that “A total of $ 4.7 billion of public sector projects will now be pushed back to 2010 and beyond”.

As I understand these expenditures have already been accounted for in the Budget, will the deferral result in an under-reporting of the Budget surplus?

Have these Development Funds already been charged to the Budget as Financial Transfers?

Temasek

I also refer to media reports about Temasek’s annual report, press release, and performance for the last year (My Paper, Aug 27).

Does Temasek’s portfolio, which grew to $ 185 billion, an increase of 13 per cent from $ 164 billion previously, which includes a $ 10 billion injection by the Minister for Finance (incorporated), mean that the increase without the $ 10 billion injection was $ 11 billion ($ 185 - $ 10 - $ 164 billion) ?

So, does it mean that the increase was about 7 per cent ? ($ 175 divided by $ 164 billion).

How much assets have the government injected into Temasek in its 33-year history ?

Have these injections been by way of cash or state assets ?

In respect of the injection of state assets, were they injected at nominal or market value ?

http://theonlinecitizen.com/2008/09/population-and-national-investments-missing-numbers/

[kennynah]

In the interest of transparency, can Temasek and GIC give Singaporeans more details ?

tan gu gu

[-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?

Given the above, does citizens of Singapore even have a right to request for more transparency?

[winston]

NEWSMAKER-Singapore GIC's key man sees opportunities in gloom

By Saeed Azhar and Kevin Lim SINGAPORE, Oct 5 (Reuters) - When Tony Tan, executive director of Singapore's biggest sovereign wealth fund, warned in July the world might plunge into its worst recession in 30 years, many shrugged off his remarks as too gloomy.

Three months later, Tan's prophecy of doom is becoming a reality as the credit crisis ravages U.S. and European banks and takes a growing toll on the global economy.

Tan's Government of Singapore Investment Corp (GIC) is meanwhile sitting with 7 percent of its estimated $300 billion portfolio in cash and another 26 percent in G7 government bonds.

Tan, a 68-year old former finance minister, professor and banker, and his team are now cautiously sifting through the financial carnage to shop for distressed assets in the United States in an effort to boost long-term returns for Singapore's central bank.

GIC released its first performance report last month, after increased scrutiny of sovereign funds by Western lawmakers who want them to be more transparent, and revealed a 4.5 percent real return in Singapore dollar terms over 20 years.

[ID:nSIN92390] "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," Tan, also the fund's deputy chairman, told reporters at the launch of the report.

Song Seng Wun, a Singapore-based economist with Malaysia's CIMB, said Tan's long stint with the private and public sector makes him experienced enough to guide GIC through the crisis.

"I don't think you can compare him to an investor like Warren Buffett," he said. "But he is an old hand who has seen the ups and downs of the Singapore economy and it is good to have someone like him steering the ship." GIC, which manages part of Singapore's foreign reserves, ploughed $18 billion into UBS and Citigroup in December and January, though shares of the two banks have since fallen as the credit crisis tightened its grip.

By contrast Buffett, regarded as one of the world's greatest investors, waited until the past two weeks to spend $8 billion on shares in Goldman Sachs and General Electric Co .

CONTRARIAN Tan has said U.S. investments will remain a big part of his portfolio, but GIC has said it may fancy using some of its cash to buy emerging market stocks in its backyard of Asia.

Tan joined GIC in 2005 after a stint as CEO of Singapore lender Oversea-Chinese Banking Corp and over a decade in politics, which followed a PhD in applied mathematics.

"He has a quiet disposition, he doesn't talk very much," said Eu Wing Kee, a secondary school teacher of Tan's. "But when he talks he knows what he is talking about." Tan, who always has his white hair slicked back and wears vintage dark-rimmed glasses, became finance minister and was tipped by Singapore's first prime minister Lee Kuan Yew as his successor. The post eventually went to Goh Chok Tong in 1990.

"He has a quick brain and there is a decisive quality about him. He listens, takes all points of view and decides," Lee said of Tan in 1988. Lee is the chairman of GIC but leaves the day-to-day running of the fund to Tan.

People who have worked with Tan described him as consultative during decision-making but dogged once his mind is made up, with the courage to take a contrarian view.

GIC has limited its losses on UBS and Citi by taking advantage of price reset clauses in its original agreements after the two banks raised more cash to repair their balance sheets. And Tan has said GIC has room for investing in another bank.

"We always look at the risk first," Tan said in January.

"Our philosophy is if you look after the downside, the upside will look after itself."

[financecaptain]

With no due disrespect, anyone who paints a doom day picture today and yet is already somewhat in the market (taking position may be a bit too early) is only trying to hedge his bet (a 2-way bet).

Current crisis not only creates global economic downturn but also alters the global economic structure quite significantly. It is like changing the economic map and its DNA on a global scale. Sure it may be a good time to pick long term stocks but more importantly, if one is able to understand and forecast the structural change; and take positions accordingly, one will benefit the most. Would definitely like to hear more insights on this instead ....

As the famous Chinese word means : There is Danger and yet there is also Opportunity. After the dust settles, new heros will emerge.

[winston]

My first impression on reading the article was that they had only 7% in cash ...

[winston]

Singapore's Temasek launches sale of power firm

SINGAPORE, Oct 7 (Reuters) - Singapore state investor Temasek Holdings [TEM.UL] said on Tuesday it has begun the divestment process for PowerSeraya, which generates about 28 percent of the city-state's electricity.

PowerSeraya will be the last of three power firms that Temasek is selling as part of Singapore's efforts to liberalise its power-generating sector.

For the year ended March 31, 2008, PowerSeraya had revenues of S$2.79 billion ($1.90 billion) and earnings before interest, tax, depreciation and amortisation of S$355 million.

[winston]

Not vested.

Beijing Capital Intl Airport says Singapore's GIC raises stake to 7.9 pct

BEIJING (XFN-ASIA) - Government of Singapore Investment Corp (GIC) has become Hong Kong-listed Beijing Capital International Airport Co's (HK 0694) second largest shareholder with a holding of 343 mln H-shares, or a 7.9 pct stake, BCIA's parent said.

Zhang Zhizhong, general manager of Capital Airports Holding Co, which holds 56.61 pct of BCIA, said in a statement that GIC subscribed for 250 mln H-shares in a placement in late May, with BCIA issuing 313 mln H-shares at 7.45 hkd each.

GIC continued to buy BCIA H-shares on the open market in recent months, Zhang added.

BCIA reported a first-half net profit of 56.32 mln yuan, down 90 pct year-on-year. Its H-shares opened at 6.00 hkd today.

[millionairemind]

Published October 17, 2008

Swiss bailout for UBS dilutes GIC stake
By CONRAD TAN

(SINGAPORE) Switzerland's government yesterday announced a sweeping rescue of its entire banking sector, including emergency cash infusions from the public purse for its biggest bank and a toxic-asset dump for removing troubled assets from banks' balance sheets.

UBS, the country's biggest bank, received some US$60 billion in support from the Swiss government, comprising US$54 billion in state backing for the bank's soured debt securities, and a direct capital injection of six billion Swiss francs (S$7.86 billion). The move effectively dilutes the stakes of existing shareholders, including the Government of Singapore Investment Corp (GIC), which pumped 11 billion francs into UBS last December.

Credit Suisse, UBS' smaller rival, avoided a Swiss government bailout and instead raised 10 billion francs from other investors, with the biggest contribution from a unit of the Qatar Investment Authority.

The two largest Swiss banks also announced estimates of their third-quarter results, ahead of their scheduled earnings reports. UBS said it made a small net profit of 296 million francs - in line with its earlier guidance and reversing a net loss of 358 million francs in the second quarter. But the group suffered massive outflows of money as private banking customers and other clients withdrew funds or closed their accounts completely.

Its wealth management and business banking division continued to bleed badly, with net outflows of 49.3 billion francs for the three months to end-September, more than double the 19.3 billion francs recorded in the second quarter. Its global asset management division also saw net outflows of 34.4 billion francs, up from 24.5 billion in Q2.

'With today's measures, in addition to its earlier steps, UBS is confident that it has created the conditions necessary to reverse the outflow of client assets,' said the bank in a statement.

Credit Suisse expects a third-quarter net loss of about 1.3 billion francs compared to a Q2 profit of 1.2 billion francs - a result that is 'clearly disappointing', but 'understandable' given the turbulence in markets, said Brady Dougan, its chief executive.

Profits from its private banking business were dwarfed by losses from its investment banking division, which recorded a pretax loss of 3.2 billion francs, after suffering further writedowns of 2.4 billion francs. Its private banking business grew strongly, even as rival UBS faltered.

Credit Suisse said its wealth management division saw net inflows of 11 billion francs in new money during the quarter, while its Swiss corporate banking and retail banking business recorded net inflows of three billion francs.

Under yesterday's agreement, the Swiss government will buy six billion francs of mandatory convertible notes issued by UBS. That translates into a 9.3 per cent equity stake in the bank on conversion, which would make the Swiss government the biggest shareholder in UBS.

UBS will transfer as much as US$60 billion in mortgage-backed securities and other troubled assets to a special fund backed by the Swiss central bank, which has pledged to lend UBS up to 90 per cent or US$54 billion of the fund's value. That will reduce UBS's exposure to such assets to nearly zero, said Marcel Rohner, its chief executive. 'UBS has emphatically eliminated the issues that have been affecting it as a result of its exposure to US residential real estate securities and other illiquid risk assets,' he said.

'Our client businesses in Asia-Pacific continue to perform well,' said Rory Tapner, UBS Asia-Pacific chairman and chief executive.

'We applaud this move as it should relieve fears about further writedowns and eventually stem money outflows in its core wealth management franchise,' Pangiotis Spilopoulos, an analyst at banking group Vontobel, told Reuters in Zurich.

Kai Nargolwala, Credit Suisse's Asia-Pacific chief executive, told BT that a similar offer to offload soured assets into a state-backed fund and receive a capital infusion from the government was also offered to the bank, but it felt no need to take it up as it could still attract investments from other sources. 'The offer remains with us, but we don't see the necessity to do so.'

Yesterday, GIC said it welcomed the latest action by the Swiss government, which 'demonstrates the Swiss government's commitment to the stability of the Swiss financial system'.

'GIC is comfortable with our present investment in UBS,' said GIC, in response to questions from BT as to whether it would raise its stake in UBS, now diluted by the Swiss government's cash injection.

[millionairemind]

I found that 95% of retail investors when they get caught on the wrong side of the market, they always say they invest for the long term.. rather than admit that they are wrong.

Home > Breaking News > Singapore > Story
Oct 20, 2008
GIC, Temasek to invest more
They won't sell 'in panic', assured minister.

GOVERNMENT of Singapore Investment Corp and Temasek Holdings, the nation's investment companies, can take advantage of financial turmoil to add assets instead of being forced into 'panic' sales, said Senior Minister of State for Finance, Mrs Lim Hwee Hua on Monday.

Volatile global equity, currency and credit markets have 'inevitably' affected investments of Singapore's reserves, she Parliament. Still, the reserves are invested in a diverse range of assets and with a long-term strategy, she said, reported Bloomberg news.

'The investment climate has indeed been challenging. Precisely because of the philosophy we have adopted, both GIC and Temasek are in comfortable position to take advantage of any opportunities that may arise from the current downturn,' said Mrs Lim.

Financial institutions worldwide have reported more than US$600 billion in losses and writedowns.

The credit crunch, triggered by a US housing slump, led Lehman Brothers Holdings Inc to file for bankruptcy and forced the sale of Merrill Lynch & Co to Bank of America Corp last month.

Temasek, the state-owned investment company with a US$130 billion portfolio, increased investments in Merrill Lynch and Barclays Plc as the credit market collapsed in the past year.

It's the biggest shareholder of London-based Standard Chartered Plc and Singapore's DBS Group Holdings Ltd., and owns stakes in India's ICICI Bank and lenders in Indonesia, South Korea and Pakistan.

GIC, the government's fund manager that oversees more than US$100 billion of Singapore's reserves, last month said it's turning to emerging markets, private equity and other asset classes to boost returns after cutting back stocks and investments in developed nations.

The fund spent US$18 billion on stakes in UBS AG and Citigroup Inc. in the past year.

'Our investments are well diversified across a wide range of assets and currencies, which has helped to mitigate risks to the overall portfolio,' Mrs Lim said.

'This strategy has served us well, so unless there are compelling reasons to depart from this long-term approach, the ministry will not direct GIC nor Temasek to change its portfolio approach.'