Lady Bracknell admonishes Temasek

Temasek Holdings reportedly lost half a billion pounds in December 2008 and January selling its stake in Barclays Bank. This news comes after that of the sale of its Bank of America stake, reportedly losing over US$3 billion. Has the “long term investor” lost its nerve and gone onto panic mode? Full essay.

12 Responses to “Lady Bracknell admonishes Temasek”

  1. 1 Teck Soon 5 June 2009 at 04:15

    How did Singapore amass such a large amount of cash to invest in the first place? If the US government were to have so much cash on hand that they were able to invest in the stock market, people would feel that taxes must be too high and demand a rate reduction. I am curious if Yawningbread supports the whole idea of Singapore amassing such large reserves, presumably partially at the expense of taxpayers. If taxes were lower and very little reserves accumulated, then Singaporeans would essentially be saving that money and making their own investments instead of letting Ho Ching decide for them how to invest. But in Singapore, reserves accumulated and GST is increased at the same time. And as for whatever portion of that money is attributable to CPF, I’d just like to point out that the social security fund in the US is fully invested in only safe funds with zero risk. Bush proposed using that money to invest in stocks but Congress rejected his idea. It’s a good thing that the US did not follow Bush’s advice or they would have lost money just like Singapore did.

  2. 2 Anil Balchandani 5 June 2009 at 08:22

    Excellent analysis. Your insight into this is refreshing.

  3. 3 George 5 June 2009 at 12:57

    I take back what I said about figuratively shooting them, no they should be haul before the people’s court and made to confess their arrogance, stupidity and recklessness before being quartered by four horses.

    That should help to mollify public anger over such high handed, irresponsible and boorish behaviour and undue arrogance.

  4. 4 hugewhaleshark 5 June 2009 at 21:46

    You know, I really do think that someone at the top of Temasek made the call that the world is falling apart. We see signs of that in some of the decisions that they made: 1) sell what you own, before it eventually becomes worthless, and 2) raise money from the market even though share prices are terrible, to make sure the TLC companies survive the crunch.

    I’m not sure what this kind of a decision would have been based on, but it looks ill-conceived on both counts…

  5. 5 sgcynic 6 June 2009 at 05:29

    Not misfortune; mismanagement.

  6. 7 Anonymous 7 June 2009 at 03:22

    I read both pieces of news when they came out. The magnitude of the losses is unheard of. And to think no one is reacting at all. It’s very upsetting.

    Some random thoughts:
    1. The decision-makers at Temasek had better have been fired and asked to pay back previous bonuses. Any fund manager with such performance (the first one would have sufficed) would surely have been.

    2. Did anyone at Temasek see that a foreign sovereign wealth fund isn’t the top choice as funding source for top-tier banks (as I recall, Warren Buffet had declined to invest in Merrill Lynch, and there were other examples) and therefore the “opportunity” probably wasn’t a very good one since it was passed up by several other, more savvy investors?

    3. Why does Temasek even exist? I can see some rationale for an agency to invest for the development of a country (e.g. to build infrastructure), but we;re past that now and is there any rationale for a national investment management house? There is no social security net to pay for. And ex-civil servant types really don’t seem the right sort for the investment line.

  7. 8 Anonymous 7 June 2009 at 16:38

    It pains me to see old folk on the street gathering cardboard boxes for reuse/recycling when SG/Temasek has been amassing billions in past reserves for investment.

    Reserves belong to the people and more should have been redistributed to the people who contributed to their build up, people such as those who toiled as lower-skilled labour through the 1960s to 1980s.

  8. 9 Sgpo 19 June 2009 at 02:39

    I thought it was said that we have to pay top dollars to attract these people to run the country, who would otherwise be thriving in the private sector?

    What is the public reaction? Are there any??

    Thanks, Singaporean Overseas

  9. 10 quantum 19 June 2009 at 09:02

    >> Better than Warren Buffet

    June 18, 2009

    Temasek still outperforms

    By Alvin Foo
    SINGAPORE investment agency Temasek Holdings may have taken a hit recently on some of its high-profile banking investments, but over the longer term it has outperformed key global benchmarks.

    Figures obtained by The Straits Times show that over a 10 year period to March this year, Temasek outgunned several closely-watched equity indexes.

    It also beat other notable long-term investors such as Berkshire Hathaway, a top US investment company headed by billionaire Warren Buffet.

    Temasek’s performance has come under scrutiny in recent months after it suffered significant losses earlier this year on investments in Western banks Barclays and Bank of America (BoA).

    The state investment house delivered an annualised total shareholder return by market value of 5.4 per cent from March 1999 to March 2009, according to figures obtained by The Straits Times.

    This compares with a 4.5 per cent return in the same period for the MSCI Asia Pacific excluding Japan index, 3.1 per cent for the MSCI Singapore index, and -3 per cent for the MSCI World index.

    MSCI indexes are key indicators commonly used by institutional investors to see how well they are doing relative to the market.

    Temasek’s main investments are in stocks, with the bulk of its assets in Singapore and Asia, so these indexes are regarded as a useful gauge of its performance.

    Temasek’s returns were also better than that of long-term investors Swedish investment firm Investor AB, which delivered 3.7 per cent, and Berkshire Hathaway, which yielded 0.7 per cent.

  10. 11 it is hurting 27 June 2009 at 21:38

    clearly a country which gives too much power & authorites to a few persons is heading up a dangerous path. It is a path destined to go wrong. Given ministers meets regularly and weekly and given their constant position – we leave it to the the board of directors, should this view be changed henceforth. As proven this view NO longer hold water. Ministers are elected official who have a fudiciary duties to safe-guard our valuable reserves.

    I fret to think how the PAP government intent to make back those billions lost while ST try to massage the lost as nothing. Another bad moves or investments may mean we lose twice and everything. By which time, it will be too late.

    The fear amongst SIN is real, there is simply too much powers given to few individuals to buy, invest and act on impulse.

    SIN no longer believes there is prudence and shrewness, that the million paid out to hire top brains, their analysis is no better than any average SIN; their analysis shows there is no control over impulsiveness investments and a lack of methodology over control of state-owned funds.

    Shouldnt the State fire those million dollars executive who wine and dine on State expenses in New york & are no better than any average SIN. You mean they fly often to New York to do what? We hear about the 500 billion sub-prime in SIN before the US banks start to collapse. What are these executive good for. They were still salivating from their gain in 2005/6 and became too greedy. Old man said they were paid even higher than Ministers.. See they became greedy. More Money breeds greed and throw common sense to the wind.

    Example SIN are still still reeling from the 400 million lost to ABC Australia child-care.. just think again CHILD-CARE. PAP runs child-care – is it that profitable to throw 400 million to the wind.

    There is simply too much lapses & abuses for SIN to now trust PAP for what they say. SIN are tired of hearing that there is acountability whereas SIN now think there is NO accountability, it appears SIN is run by a few person. The rest of highly paid executives are happily enjoying state paid millions and drunk on the millions.

    Those SIN who actually worked hard behind the scene, they know there is NO control. Too much monies, too much greed, too much drunkenness. Too much control by a few person.

    The whole of hard-working SIN who work their guts out to pay bills and keeps their families intact now know you tax them till hell while you enjoy in heaven & throw money it to the wind at your fancy.

    A visitor from USA of mine remarked that old frail 80 years old old lady collecting dishes @ food centre should be given a decent retirement.. i carelessly said we need her CPF monies to top up.

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