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

[Poles]

Why is this $58billion woman stepping down only in Oct 2009?

contract say 9 months notice....plus clear leave 1 month

[LenaHuat]

Hi Poland
Thank Q Q. 10 more months' of renumeration for some elbow-holding
We have a moon and 5 stars in our national flag. Do we need 3 suns?

[millionairemind]

Published February 12, 2009

COMMENTARY
Don't paper over cracks with paper losses
It's time to review what caused them and ascertain what needs fixing
By WONG WEI KONG
ASSOCIATE NEWS EDITOR

PAPER losses are not real losses - but it can be argued that the two are really just different sides of the same coin.

And there could be danger in taking too sanguine a view of paper losses, and seeing them as something of less concern than real losses.

Let's put it this way: the one meaningful difference between a paper loss and a real or realised loss is holding power, or the ability of an investor to sit out the loss against another's need to sell and thereby realise the loss.

All the factors leading to the loss, whether paper or real, are similar, such as wrong calls, misplaced assumptions, unfortunate timing or bad advice.

Tuesday's revelation of the performance of Temasek Holdings provides a study on paper losses.

The global financial meltdown cost the Singapore investment company a $58 billion loss in eight months, the government said. Temasek's net portfolio value fell 31 per cent from $185 billion on March 31, 2008 to $127 billion on Nov 30, 2008.

The loss is on paper, it was stressed, and the government said it had full confidence in Temasek as well as the Government of Singapore Investment Corp (GIC) to ride out the market downturn as long-term investors and produce solid returns over time.

What can be said about this? For one thing, it is a paper loss because Temasek has a holding power that is the envy of most fund managers. Second, given its very longterm horizon, it is improbable that any of these losses will be realised (indeed, they could turn to gains). But all that should not prevent a review of what led to the losses.

To be fair, the drop in Temasek's net portfolio value was less than the fall in some regional equity indices (the MSCI Singapore index lost 44 per cent and MSCI Asia ex-Japan shed 45 per cent over the same period).

Still, there's nothing to stop Temasek from outperforming the rest of the market by a bigger margin or to book a much smaller loss (or even gain) - which is what Singapore Airlines did, by booking a hedging gain amid steep losses within the industry.

Too often, paper losses are used to soften the blow of investments that have not gone according to plan. But in the real world, paper losses do have consequences.

Take listed companies. A lot of the losses or weaker earnings being announced by companies are down to fair-value adjustments, with accounting rules requiring firms to mark down the value of their investments or assets even if they have not realised the losses - in other words, paper losses. But the market still treats these as bottomline results, and the fact that these are paper losses does not save the companies from being punished by investors.

It's the same for individuals. An investor who had borrowed to buy shares would be asked to top up the balance if he suffers paper losses of a certain extent, even if he does not realise the loss. A homeowner will also be asked to top up, if the value of his property drops by a certain extent from the original valuation, even if it's all on paper. The concept of negative equity and accounting for it, in fact, hinges on the treatment of paper losses as potential actual losses.

So there are realities to paper losses.

Back to Temasek: It's highly likely, given the nature of its mandate and its long-term view, that the damage to its portfolio will remain "just" paper losses. Yet, the extent of the paper loss - a shock to many Singaporeans - should still lead to a closer examination or a rethink of the way Temasek operates and invests. If all's fine, and only the markets are to be blamed, so much the better. If some adjustments are needed, now is as good a time as any to begin that process.

[LenaHuat]

One of the best lessons I've learnt from history is this : Survival is not a given. Look at all the smart towns of the ancient overland silk route. Most of them perished into the sand and are forgotten.

IMHO, many banks will never return to its historical glories. The ABC Learning Co is dead.
US$58 billion is no kettle of ikan bilis.

I tell this govt : Accountability is all about looking back and pinpointing where and who made mistakes. Don't give me this crap about not being introspective, not regretting abt past actions. Juz move forward.
We, citizens, want accountability and hearings.

[LenaHuat]

I hven't quite finished my piece of tirade.
Don't try to paper over a gargantuan loss of US$58billion with a "31% fall".

It's US$58,000,000,000.

[-dol-]

I share Lena's anguish at the massive wealth destruction of Singaporeans' reserves [I know kenny will say it ain't ours ].

How did Temasek/GIC's investment managers do their due diligence??? Those toxic assets embedded in the banks' books is there for all to see. If it is too complicated to value and understand, just walk away. Those who walk away from Enron and are candid about their ignorance about Enron's "sophisticated" manoevres actually did not look that stupid. Then there were those who rode Enron while the going was good and sold near the top to "greater fools" - kudos to them for ultimately making $. But to average down into black holes like C/MER etc...

C & BAC are technically insolvent. If their toxic assets are marked-to-market, they are zilch. Will we ever recover the money from such zombies even if we have a 100-year horizon?

By the way, I am also concerned about the US treasuries in our reserves. What are they really worth with a drunkard US printing US$ at will. We are talking about trillions that they don't have and we expect the world to continue financing this massive black hole to perpetuity? So how long do we think this "happy" state of affairs can continue indefinitely before some day of reckoning of humongous proportions explode in our faces?

I guess 20 years of leveraged partying can really dull the brain...

[millionairemind]

One of the best lessons I've learnt from history is this : Survival is not a given. Look at all the smart towns of the ancient overland silk route. Most of them perished into the sand and are forgotten.

IMHO, many banks will never return to its historical glories. The ABC Learning Co is dead.
US$58 billion is no kettle of ikan bilis.

I tell this govt : Accountability is all about looking back and pinpointing where and who made mistakes. Don't give me this crap about not being introspective, not regretting abt past actions. Juz move forward.
We, citizens, want accountability and hearings.

The Minister Mentor warned that the Singapore economy would be in jeopardy if it does not pay top dollar for top people.

He said if this S$46 million was cut to maybe S$36 million or S$26 million, the country would save S$20 million but in the process, would jeopardise an economy of S$210 billion.

"So for the average family earning S$1,500-S$3,000, we are talking of astronomical figures but for people like me in government, to deal with the money which we have accumulated by the sweat of our brow over the last 40 years, you have to pay the market rate or the man will up stakes and join Morgan Stanley, Lehman Brothers or Goldman Sachs and you would have an incompetent man and you would have lost money by the billions," said Mr Lee

http://www.channelnewsasia.com/stories/ ... 75/1/.html

Need I say more?

[-dol-]

But didn't somebody just lost billions employing people who could walk into MS/GS and their ilk and investing into companies with top talents like C/MER/UBS/Barclays???

What do you call a "competent" man who loses billions?

This is classic...

[winston]

Singapore says sovereign fund losses won't drain reserves

Reuters - Sunday, February 15SINGAPORE, Feb 15 -- Singapore's reserves will not be depleted by the losses suffered by its two sovereign wealth funds, Temasek and the Government of Singapore Investment Corp , a government minister said in remarks published on Sunday.

Lim Hwee Hua, junior minister for finance, said that the decision by GIC, which manages central bank's reserves, to invest in "dangerous asset classes" was not a sudden move, but a slowly evolving strategy.

"Income from reserves is crucial. We cannot have income growth if we just leave the money in fixed deposits," the Straits Times quoted Lim as saying. Lim said that both state funds were long-term investors that should continue to deliver good long-term returns needed for the reserves to build up.

Temasek Holdings [TEM.UL] and GIC have been badly hit by the global market turmoil and by their recent investments in global banks such as Merrill Lynch, UBS <UBSN.VX> and Citigroup <C.N>.

The net value of Temasek's fell by S$58 billion ($38.5 billion) to S$127 billion from April to November 30, the government disclosed on Tuesday.

Lim said that the key now is to put reserves in a balanced portfolio to diversify risks, the Straits Times quoted her a saying.

The size of Singapore's total reserves has never been disclosed, although they include at least $200 billion in reported assets by its two sovereign wealth funds, savings from government's budget surpluses over the years and land sales. The central bank's foreign reserves stood at $167 billion as of Jan 31.

[financecaptain]

Shocking to read ....

http://singaporenewsalternative.blogspo ... ar-of.html