Temasek, GIC be more open

May 30, 2009

Temasek, GIC be more open

		Mr Palmer (right) said Mr Tharman's statement was more open than Temasek's letter to the media.

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STATE investment vehicles Temasek Holdings and the Government Investment Corporation of Singapore (GIC) can afford to be more open about the thinking behind major investment decisions.

Mr Michael Palmer (Pasir Ris-Punggol GRC) urged this yesterday in a speech summing up the debate in the House over the past five days on the President's Address.

He said the statement made by Finance Minister Tharman Shanmugaratnam to Parliament on Thursday was more open than Temasek's letter to the media a week earlier on May 22, even though both dealt with the same issue - the divestment of Temasek's stake in Bank of America (BoA).

Temasek's own statement did not put in perspective the overall gain in its portfolio over the years, while the minister's statement did.

Temasek's sale of its BoA stake in March was reported in the press earlier this month.

The estimated losses of between US$2.3 billion (S$3.3 billion) and US$4.6 billion led to a public furore and several MPs called on the Government to review the original charters given to Temasek and the other Singapore investment body, GIC.

Mr Palmer said he was reassured by Mr Tharman's response to MPs' questions on Temasek and GIC.

However, he felt more could have been done by Temasek and GIC to 'explain these issues of public interest clearly so that Singaporeans are made aware of the facts and have their questions answered'.

Mr Tharman had assured the House on Thursday that both Temasek and GIC monitor their investments very closely, but that they were ultimately long-term investors.

As a result, their performance could not be judged based on any one investment such as the 2007 purchase of Merrill Lynch shares, that were subsequently converted to BoA shares when BoA took over Merrill.

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Temasek made big gains

May 29, 2009

Temasek made big gains

Tharman explains the overall track record of state investment agency

By Alvin Foo
		Mr Tharman said Temasek's portfolio grew $56 billion from March 2003 to November last year even after taking recent sharp declines into account. -- PHOTO: TAN SUAN ANN

FINANCE Minister Tharman Shanmugaratnam on Thursday defended the overall track record of Singapore state investment vehicle Temasek Holdings.

Long-term investor, but not locked in forever HOW did Temasek Holdings' sale of Bank of America (BoA) shares after owning them for just over a year square with its oft-repeated position that it invests for the long term? The recent sale of its BoA stake led to estimated losses of US$2.3 billion (S$3.3 billion) to US$4.6 billion. ... more

Mr Tharman said Temasek's portfolio grew $56 billion from March 2003 to November last year even after taking recent sharp declines into account. It averaged returns of slightly over 15 per cent a year.

He disclosed this detail when responding to questions on Temasek's sale of its Bank of America (BoA) stake raised by Ang Mo Kio GRC MP Inderjit Singh and Non-Constituency MP Sylvia Lim. The sale led to estimated losses of between US$2.3 billion (S$3.3 billion) and US$4.6 billion, prompting criticism of the move.

In February, Parliament was told that Temasek's net portfolio value dropped $58 billion - from $185 billion to $127 billion - during March 31 to Nov 30 last year, a fall of 31 per cent.

Mr Tharman said on Thursday that the 'only reasonable way' of evaluating Temasek's performance is 'to look at how the losses and gains add up, and how its overall portfolio performs over time'.

It was not realistic for Temasek to outperform the market every time or to avoid losses amid sharp market corrections, he said. 'Temasek has in fact made large investment gains over the course of the market cycle that began in 2003, including the boom that lasted till 2007 as well as the subsequent bust,' he said.

Its portfolio decline came after a 'much greater gain' of $114 billion over the preceding five years. 'Even after taking into account the recent sharp decline, Temasek's portfolio had still grown by $56 billion over the course of the cycle.'

Temasek's performance as at last November also took into account 'all unrealised losses including mark-to-market losses on the Merrill investment'.

Mr Tharman said a 'large part' of Temasek's $58 billion portfolio decline, about $32 billion, was due to the slump in the market value of the 10 largest listed Temasek-linked firms here. Their share prices retreated 41 per cent between March and November last year, in line with the movement of the market here.

Temasek has performed 'respectably' compared to relevant market indexes and reputable institutional investors, he said. 'Temasek has achieved total shareholder returns by market value of slightly over 15 per cent per year on average (in US dollar terms) over the cycle. This compares with 6 per cent annualised gain in the global equity market indices (MSCI World).'

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• MAY 29, 2009

Temasek Portfolio Lost $39.91 Billion

By SE YOUNG LEE and COSTAS PARIS

SINGAPORE -- Singapore's state-owned investment company Temasek Holdings Pte. Ltd. lost 58 billion Singapore dollars (US$39.91 billion) from the end of March 2008 to November 2008, or a little over than half of its portfolio-value gains from the previous five years, the city-state's finance minister said.

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Associated Press

Singapore's finance minister, Tharman Shanmugaratnam, shown in May, said a downturn in global equity markets contributed to Temasek's losses.

Tharman Shanmugaratnam, speaking in parliament, said Temasek's investment portfolio grew by S$114 billion during the market cycle from 2003 to 2007.

Temasek's portfolio-value fall from March to November 2008 was in large part due to the decline in value of investments in Singapore amid a sharp downturn in global equity markets, he said. He didn't disclose the fund's losses from the recent sale of its holdings in Bank of America Corp.

"Of the S$58 billion decline, S$32 billion was attributable to the drop in market value of just the 10 largest publicly listed Temasek-linked companies in Singapore," Mr. Tharman said.

He said share prices of these companies fell by about 41% on average from end-March to November.

Temasek-controlled companies in Singapore include Keppel Corp., the world's largest rig-builder; Singapore Airlines Ltd.; property developer CapitaLand Ltd.; and Singapore Telecommunications Ltd., Southeast Asia's biggest telecommunications operator by revenue.

Mr. Tharman said the S$58 billion fall also includes "all unrealized losses" including mark-to-market losses from Temasek's investment in Merrill Lynch.

He said the full-year accounts to end-March 2009 shouldn't be fundamentally different from the losses disclosed given the lack of major changes in global equity markets from the end of November to March of this year.

Temasek bought 14% in Merrill beginning in December 2007. Its stake was converted into shares of Bank of America following Merrill's acquisition by the U.S. bank in September.

Temasek said this month that it divested its entire stake in Bank of America during the first quarter of the year. Two people familiar with the matter said at the time that Temasek lost about US$4.6 billion from its original investment in Merrill.

"The sale of its [Bank of America] stake does not signify a shift in Temasek's investment orientation, from long term to short term," Mr. Tharman said. "Temasek may divest an investment, even at a loss, to get a better mix of risks for its overall portfolio or to position itself to take advantage of opportunities elsewhere."

He reiterated Temasek's earlier comments about the divestment, noting that the acquisition of Merrill by Bank of America meant a "different investment proposition" given the latter firm's "linkage to the broader U.S. economy" and that the risk-return environment had changed substantially.

"Temasek learned of the Bank of America-Merrill merger after all was said and done despite being one of Merrill's biggest investors with a 14% stake," one person familiar with the situation said. "They put money in an investment bank [Merrill] and suddenly found themselves owning part of a commercial bank [Bank of America]. They never wanted to be part of Bank of America."

Mr. Tharman said Temasek makes riskier investments compared with the Government of Singapore Investment Corp., which invests Singapore's foreign-exchange reserves, and in turn is expected to generate higher returns.

"While Temasek has performed better than many other large investors over this six-year market cycle, it is not realistic to expect it to outperform in every cycle," he said. "It is also not realistic to expect it to avoid losses on every individual investment, or losses on its overall portfolio when the markets go through sharp corrections."

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