- Minister Tharman, Jan 2008 on Singapore investments in banks.
How can good long term investments whose risks are thoroughly assessed plunge by 50-80% within 8 months?
I remember reading the article below more than one year ago. I searched for it to find the names of those who dared to speak up and question the govt vigorously on the bank investments and what was said in response. Looking back 1.5 years there were numerous warnings by Buffett, Soros, Jim Rogers, Meredith Whitney and countless others...all one needed to do was to listen. I found some interest comments in my blog right about the same period[link]. It was like the whole world can see what our GIC & Temasek could not. At the minimum, even for those who were optimistic these were extremely risky investments....but in actual fact they were really bad investments. The report also said in many cases, the banks approached GIC or Temasek for cash. They must have approach numerous other sources for aid who turned them down, but the GIC & Temasek fell for it.
I would like to take you back even further to a small incident in Aug 2005. A group of 4 people stood silently outside a govt building asking for accountability and transparency in various govt entities. As they stood there, Singaporeans passed by amused as if thinking to themselves "this is Singapore what do these jokers think they are doing....". Some Singaporeans might have laughed at what these group of people were doing but imagine if there were more like them with the courage to do more than talk. Because we were all sitting on our hands, 3 years later billions taxpayers money were wiped out in careless investments. Before we laugh off the methods and what seems to be foolhardy enthusiasm of a small group of Singaporeans, we have to ask ourself if doing nothing for Singapore and Singaporeans is the best course of action for the rest of us.
Billions invested “ are they safe?
Billions invested “ are they safe?
MPs Tharman: Yes, they're 'good, long-term investments' with risks thoroughly assessed.
TEMASEK Holdings' multi-billion investment in British bank Barclays about half a year back hogged the headlines. But now that the value of the US$3-billion ($4.3-billion) investment has about halved, the wisdom of recent moves by the Singapore investment agency as well as the Government of Singapore Investment Corp (GIC), to inject further billions into Western banks in distress, were questioned by Members of Parliament (MPs) yesterday. Asked the MPs: Were not some of these financial institutions in dire straits? And what if things got worse once the full effect of the United States sub-prime mortgage woes came to roost?Top of the jitters: Will Singapore's state assets be decimated by the very institutions charged with their growth?Nominated MP Siew Kum Hong summed up these concerns when he asked what due diligence measures the GIC had conducted in its latest venture â€” a US$6.9-billion investment into Citigroup last week, a deal closed within just eight days.To this, Finance Minister Tharman Shanmugaratnam said deals had been closed in an even shorter time, citing GIC group chief investment officer Ng Kok Song's interview that was first published in a Swiss financial magazine last week.Mr Tharman said: "They (GIC) have a team of people who are watching these institutions continuously, studying the financials, doing counter-simulations, interacting with the senior management of the institutions, asking them probing questions."Therefore, GIC and Temasek, who are "not newcomers in this field", usually "come in ready", as they were when they were approached by the cash-strapped banks” UBS, Merrill Lynch and Citigroup” for capital infusions amid large write-downs of their assets.Mr Tharman said the GIC and Temasek made investment decisions that were independent of each other and of the Government, and in a context where the Government was"completely hands off". With GIC "which manages Singapore's foreign reserves” the Government sets the risk tolerance level. And in the case of Temasek ” which is owned by the Ministry of Finance (MOF) ” the investment firm consults with the Government on "the expected return that we should hope to derive over the long term", he said.Was there not a possibility of a significant amount of the nation's assets being "wiped out" by investing billions in just the banking sector, asked Ang Mo Kio GRC MP Inderjit Singh.Mr Tharman gave the assurance that they were "good long-term investments", stressing that the risks of these transactions were "thoroughly, rigorously and regularly" assessed."Both the GIC and Temasek considered the banks as having a strong business franchise and good long-term growth potential across multiple businesses and multiple locations," he said.Mr Singh also asked whether there were broad guidelines set by the MOF on how Singapore's sovereign wealth funds should operate.Temasek and GIC, which each manages assets of more than US$100 billion, are among the world's largest sovereign wealth funds. GIC invested 11 billion Swiss francs ($14 billion) in UBS in December. Later that month, Temasek announced plans to inject at least US$4.4 billion and up to US$5 billion in Merrill.Mr Tharman acknowledged there will be some downside risks. It is up to GIC and Temasek to assess this risk and decide if it is acceptable. Their responsibility is to accept prudent risks in order to earn good returns on their overall portfolios, he said. "We â€¦ are scrupulous in avoiding comment, not just publicly, but internally as well, so as not to
influence decisions by Temasek or GIC. And I think that is the right balance." Source: http://www.todayonline.com/articles/233442.asp