Tuesday, November 18, 2008

Town council lost $12M ??? ...Who cares!

"In Hougang, let us keep Mr Low Thia Khiang on his toes. He is responsible for running the Hougang Town council. ........... I suggest you study the annual accounts of the town council to ensure that the funds are properly used. Check whether the arrears for S & C charges are piling up, and eating into their reserves. Make sure that enough money is put aside for cyclical maintenance. In your walkabouts, check on the estate maintenance. If Mr Low has done a good job, give him credit for it. If there are deficiencies, point them out to the residents. In short, play the role of an effective opposition in Hougang. " - SM Goh Jul 2008 HOUGANG COMMUNITY CLUB

$12M in structured products? Who cares? I would be more concerned if they refused to tell us the actual amount and leave us guessing. I'm just a bit surprised that $12M = 0.6% of the total investible reserves. Only 40% of their reserve can be invested. On the back of envelop calculation tells us they accumulated $5B in reserves for estate maintenance. This is crazy! To build a reserve of this size, they have unnecessarily burdened Singaporeans with conservancy charges which could have been lowered. This explains why I did see any rats and roaches in Hougang although MP Low has not increased conservancy fees for decades. Anyway $12M lost is nothing in the scheme of things....why?

In October alone, Temasek lost S$16.4B counting only stocks it owns on the SGX which are mostly Singapore blue chips. We have also heard the unfortunate news of ABC Learning in which Temasek lost US$400M to a CEO who was a former milkman turned CEO turned party animal. ...he sure didn't forget how to milk his shareholders. ABC Learning is now insolvent - I hope Temasek did some learning in this sorry episode. The full tally of Temasek's losses perhaps will never be know to the citizens of Singapore. But if you have been reading my blog these salient questions remain:

1. According to the PAP govt, one of the reasons for holding so much reserves is to safeguard Singapore during the period of crisis. Why then does Temasek Holdings invest in so many risky assets whose value will fall during crisis?

2. Why still no transparency? If transparency is hard during the better times, it is harder during the bad times when there are losses. Citizens to which the reserves belong don't know what is going on. Have you ever own something you don't understand? ...Minibonds? Troubling isn't it.

3. How much is enough? Don't forget the these reserves are the sweat and blood of the people. It is the people who paid for the service rendered by the state own monopolies etc that allowed the reserves to be built up. It cannot be "the more the merrier" because it translates to hardship for the people. Big reserves are not a happy situation when the people are struggling. Singapore has enormous reserves without a corresponding social safety net for the people.

My personal belief is that it is almost never wrong to return money to the people. If you look at USA what got them into trouble is irresponsible banks and defense spending. It is not welfare spending that got them into trouble. What is not spent on the people ends up being wasted anyway by the govt. With a lot of money lying around and people well paid to think of what to do with it, you can only end up with either investment losses or waste. It is the nature of things that the only way govts can handle large amounts of money well is to have complete transparency. ...otherwise you have competent people doing stupid things simply because they are hired to do something with the money which sometimes is best left idle in govt bonds and gold. Just look at the town council....a lot of money lying around + smart alec = losses in minibonds. All of which could have been prevented if there was total transparency.......
If the town councils are bad, what do you think happens in our secretive GIC and Temasek Holdings....

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SINGAPORE, Nov 4 — Last month's market upheaval swept away S$16.4 billion (RM40 billion) in market value from Temasek Holdings’ portfolio of major investments in Singapore-listed companies alone. Calculations, based on the shrunken market capitalisation of 12 companies Temasek has a significant stake in, show that the value of its investments fell 25.7 per cent between Sept 30 and Oct 31. Compared to the beginning of the year, the drop is 45.7 per cent, or S$40 billion. Singapore’s stock market capitalisation plunged S$123.5 billion in the month of October. Temasek saw a huge chunk of market value destroyed — on paper — from its 55 per cent stake in SingTel, which translated into S$7.1 billion getting sliced off its portfolio's value in the month of October. The value of its SingTel stake fell S$13.7 billion from Dec 31, 2007. Its 29 per cent core interest in DBS Group meant that the bank contributed the second largest cut in value to Temasek's Singapore portfolio — S$2.4 billion over the course of last month. DBS had borne the brunt of the sell-off among the three local banking stocks in October, losing 34 per cent of its market cap. Temasek's 54 per cent share in Singapore Airlines' market cap dipped S$2 billion in the month of October, and S$4 billion this year so far. Its other transportation and logistics investments saw market value shrink too. Temasek's stake in SMRT Corporation meant a loss in market value of S$360 million, while the value of its interest in Neptune Orient Lines fell by S$563 million. Market cap fell for the three infrastructure, industrial and engineering stocks with Temasek interest too. Temasek's share of ST Engineering, Sembcorp Industries and Keppel Corporation's market value losses last month came to S$584 million, S$726 million and S$1.1 billion respectively. Technology stocks Chartered Semiconductor Manufacturing and STATS ChipPAC meant value cuts for Temasek of S$232 million and S$776 million respectively in October too. Its comparatively smaller 15 per cent stake in Fraser and Neave still led to a loss in value of S$171 million last month. CapitaLand was not hit as badly in October, so Temasek's 40 per cent interest in it led to a loss of S$237 million, though for the year so far, the property developer has taken S$3.8 billion off Temasek's portfolio. Geographically, Singapore accounts for about a third of Temasek's net portfolio value. It maintains a 12 per cent portfolio exposure to Asean countries, 22 per cent to North Asia, 23 per cent to the OECD economies, and a 7 per cent exposure to emerging South Asian economies such as India and Pakistan

19 comments:

Anonymous said...

Someone should be held accountable for these bad decisions. 5billion in reserves, and people still have to pay for conservancy charges. It doesn't make sense. What do they do with so much money lying around, do they return it back to the folks, or keep some for themselves?

Anonymous said...

I PERSONALLY DON'T BELIEVE they invested in those products and lost that amount of money....because why didn't they say so earlier? after many investors were angry over their losses...and went to Speakers' Corner...then they have "the exposure"...

why didn't they act like Mas Selamat's case? very prompt?? That is, when people complain about losses...then they STRAIGHTAWAY say, "hey...we have lost $12M u know!"

Anonymous said...

Think the Public assistance per month unable to work owing to old age, illness or disability and have no means of subsistence and have little or no family support is $290 per month. 12 millions can pay 3448 singaporeans who are unable to work owing to old age, illness or disability and have no means of subsistence and have little or no family support for 12 months.....remember the quote someone "how much do you want"...perhaps we should ask "how much hard earned money from singaporeans do they want to continue losing???"

Anonymous said...

Lest it escaped notice, one of the two PAP controlled TC that had direct expo to the now worthless structured products had no less than a DBS Bank MD ( Global Financial Mkts)as one of its MPs. Coincidentally he was also an ex SAF BG.

Anonymous said...

since our mm said these notes investors know exactly what they are doing, why these town council put public money into risky funds?

instead of damage control justifying not that much, don't they have any regrets about losing the money (i guess it's not their money any way...)

this shows the town council had been overcharging us for a long time when already so much surplus, and overcharging for all the upgrading plans ....

Anonymous said...

Correction to 8.52 post

Apologies, the said MP is only an SAF Major, not a BG ( there are two BGs in DBS but they are unlikely to be in the 900 )

Anonymous said...

Er...can we request for our TCs to be banned from coming IRs?

sgcynic said...

I'm sorry that it happened. It should never have happened. WTF

sgcynic said...

Latest update.

AS RESIDENTS of Holland-Bukit Panjang Town Council reacted to the news on Monday that their constituency’s funds were exposed to Lehman-linked structured products, its chairman Dr Teo Ho Pin had this message for them: Be thankful that the funds have grown under the Town Council’s watch.
Told of the rumblings on the ground about the high-risk investment, Dr Teo said the potential $8-million loss should be viewed in the context of the $24 million in investments generated over the past six years. If the Town Council had invested all its funds in lowrisk investments, it would have earned only $5 million, he said.

“They (residents) should thank the Town Council for working hard to come up with a diversified portfolio to generate income so that residents do not have to fork out more money.”

http://www.todayonline.com/pdf_open.asp?id=1911HNR005

THANK YOU for not being my MP. Will certainty vote you if I have the chance.

Satay said...

Dear Mr Tan,

Where's the satire?

Any more such non-satirical articles I might have to quit your blog!

Anonymous said...

I feel Lucky is losing his mojo...

Come on sgpean, ask yourself, for 2008 alone everyone has at least received SGD $500 fr the gov. Where are these money now? Have u keep them in the saving account? I doubt so. Look at the record turnout at travel fairs, and u know where the money goes. Once the $ reach your hand, u feel rich, so u spend like king. After a week of being king, u wonder why u have no money now. Actually I spent that on a dive trip as well haha..

Gov hands out 5k to everyone wont solve any problem. It will be gone in a min. Whats the point handing out another million to the ppl?

Anonymous said...

I think lucky tan is getting so frustrated with things that satire is no longer an option....this has been a really really bad year in terms of how the government has fared, yet at the end of it all, the civil servants would still get their fat bonuses, we should downsize the public service, that will reduce the budget deficit, too much deadwood, too many yes man, too many gaffes.. i believe that any1 that truly cared and who wanted to serve the people would have left the civil service by now...disillusioned. I sometimes wonder whether we Singaporeans realise what is happening, where the country is headed if this goes on.... maybe some have...and maybe they too have left....the country in this case.. disillusioned..

kk said...

Taken from SMH:

Australia's biggest banks believed him. They are owed $1.1 billion between them. Even more amazing, the Singapore Government's investment arm Temasek tipped in a lazy $400 million.

Despite sophisticated investment models and analytical tools employed by our big banks and investment houses, it shows a sucker is born every minute.
And the investors swallowed the whole silly tale hook, line and sinker that they were part of an expanding international empire.

Anonymous said...

anonymous@9:31
They are not giving YOU money

They took the MONEY from YOU first.

It just seems senseless to collect SOOOO much for our S&C fees when they need so little to run the whole estate.

Anonymous said...

Those responsible for the loss of citizens'money should either resign, sack or commit suicide...like what happen in Japan and Korea.

Anonymous said...

Exactly, anonymous@11.07. This is not a windfall, yet many of us, including myself, FEELS like as if it is a windfall, and spend it like its coming from the lottery...

Anonymous said...

I love Mr Teo. True to its policy, the people must be thankful when they screw up. We are the only country where the people are chided and forgiven when the government makes a mistake. Why? Because they are indispensable. Why? Because we made them so. Slowly but surely the cat is getting out of the bag. When the people are struggling with 5 and 10dollars, they talk about losing millions and billions like peanuts. Why,because they don't give a shit cos our money is not ours but theirs to gamble with and to give themselves million dollar salary. Only here can the elite screw up so badly and still keep their job and even get a raise. Why? Because we have been a bunch of dumb people who gave their power away too easily for a few hundred dollars and a bagful of threats and promises.

Daniel Ling said...

They should

Lead by example
http://www.straitstimes.com/Breaking%2BNews/Singapore/Story/STIStory_304188.html

PS: Article has not much relation to the topic. Just using the Headlines. lol


To
Anonymous Anonymous said...

" Lest it escaped notice, one of the two PAP controlled TC that had direct expo to the now worthless structured products had no less than a DBS Bank MD ( Global Financial Mkts)as one of its MPs. Coincidentally he was also an ex SAF BG."

8:52 PM

Any links for the above? If dun wan post here can email me? Thanks


To Anonymous said...

I feel Lucky is losing his mojo...

Well if giving out money to pple and they anyhow spend it, then it would be a case of poor financial planning right? But not wrong also since PM ask us to spend right? Anyway isn't it better if i spend my own money rather than passing it to them to lose it? Fyi, the money given went into my savings. I didn't spend it.

Salary said...

From ST, Nov 20

What it should have been
YESTERDAY'S report, 'Five statutory boards bought credit-linked notes', said that the Monetary Authority of Singapore (MAS) had invested in credit-linked notes. This was information we obtained from a Ministry of Finance spokesman.

The ministry has clarified that MAS had not in fact invested in credit-linked notes, only financial products linked to collateralised debt obligations and credit default swaps. The ministry reiterated that these investments comprise 0.1 per cent of MAS' portfolio, and that these have yielded a net positive return this year.

Question:

Do they have the same risk in nature?