Sunday, June 07, 2009

Temasek : Quite Amazing isn't it??

I have written so much about what is wrong with Temasek until I got tired of writing about it - nothing seems to change for the better. From Shin Corp to BoA, I thought I have seen worst of the worst. But only Temasek can beat Temasek when it comes to surprises. We have to hear about it from Reuters[Link] and Wall Street Journal that Temasek has sold its stake in Barclays and has lost more than 800M pounds. Temasek had earlier invested about 1B pounds in Barclays. Temasek explained that it took its losses in BoA because their investment thesis had changed from Merrill's specific businesses to the more diversified BoA linkage to the broader US economy"[Link]. How then do they explain the Barclays losses? They bought a bank that remained a bank so there is no change in thesis. Temasek will now have to invent a new explanation for selling its stake in Barclays at a huge loss. The one thing they will never do is admit they made an error in judgement getting into these risky investments that turned out to be bad. The 1st step in improving an organisation is to accept and learn from major mistakes - if they had done that when they lost money in those risky investments in Global Crossing or Shin Corp, they might have avoided the massive losses that came after that.

The other amazing thing that happened after $50B loss of taxpayer's money is our finance minister stepping forward to explain there is nothing wrong with these losses because Temasek had made gains of $100+B if one measures its gains from the 2003 trough to the 2007 peak. Tharman explained that the annualised gains are 15% compared with the 6% gain in the MSCI Global Index. Tharman had chosen 2003 instead of, say, 1999 as the starting point because that was the market bottom and the absolute returns would be larger than if he had chosen another starting point. It is not clear why he has chosen to compare with the MSCI Global Index when a large part of Temasek's portforlio is in Singapore and the STI gained 16% in the same period. It is also not clear how profits Temasek booked from the sale of strategy assets that are not listed on the market such as the 3 power stations that were sold to the Chinese, Malaysians and Japanese for a total of $12B (They explained that the purpose of the sale was to create competition - but you really have to wonder how that can happen when each party now owns a portion of the total capacity ...what incentive is there compete when they have unable generate for any significant gain in market share?). It is indeed surprising for me to see an elected representative who is supposed to serve Singapore citizens trying to defend Temasek by using an arbitrary measure of performance. The correct way to measure Temasek's performance is to look at its return from active management vs the returns from passive holdings. The value add of the 350 people hired by Temasek is in the deals it actively cuts and the decisions its managers make. So far the outcome from many of these major deals don't seem to be good.... Much of the returns from its passive holdings in Singapore Blue chips requires little management and decision making....are achieved just by holding on to profitable GLCs.
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The attempt to spin away Temasek's losses leaves much to be desired. Every explanation just leaves more unanswered questions. It is time for elected officials to take stock and make a genuine effort to ensure that the massive losses we have seen do not recur in the future. They either do that or we have to elect the people who will do the right thing in the next elections.

42 comments:

Anonymous said...

frankly, i think there is another way to look at this thing; temasek is a private company, what they do is their business.

when they make money it has nothing to do with us, it shud not be any different otherwise.

hence, the way the govt/ temasek reported or as you mentioned, kept their silence over some of the issues relating to their profits and losses, is nothing unusual or out of line.

... just my opinion. OOPS.

Alan Wong said...

Thinking back, our PAP Govt made the decision to pay world class salaries to our Cabinet Ministers because LKY once mentioned that these salaries were peanuts compared to the billions of funds being managed and the gains generated from our investments.

Now that these gains has been reversed, should their world class salaries revert back to the old pay scale.

How come they now pretend that they are not responsible for the losses ?

Anonymous said...

What to do, as long as there are 50% walkovers, 66% mandate and 98% seats for the PAP at every election.

So much so that the PAP had to pity the opposition by giving 9 NCMPs to them at next election.

Very sad for Singapore. Looks like even if PAP disappear no alternative can even take over!

DanielXX said...

Uncle, stock-taking will taken 200 man-years or something like that. Our President Ong himself was told when he asked the same question. Don't you dare waste our valuable bureaucrats' time. They have better avenues to add value, such as attending cooking classes.

Anonymous said...

"I have written so much about what is wrong with Temasek until I got tired of writing about it..." - Lucky

Dear Lucky

You have spoken the final truth about it all. You have done your very best; you being one of the few bloggers working so hard to address what has got terrible wrong with the Singapore story.

There are so many things going wrong, so big and disastrous are the mistakes, one after another that even those who know about the facts have become immune to the shocks, got used to the lack of public dissent. Even the few heroic want-to-do-right civil activists like you are also becoming rather tired talking about them, "stoned" as it were.

I see this as the reflection of the most deceitful of governments, of mis-government, because unlike other wayward dictatorships, the Singapore government is yet being admired and held up as a role model by other democracies.

The whole trade secret that PAP employs is its control of public debate, suppression of the press, stone-walling of sensitive issues. As long as discussion is under such severe control, public dissent will never reach a critical mass to upset the status quo.

Much as political critics try and even very hard at it, the PAP castle remain intact. The majority of voters will continue to support PAP but in 20 years time onwards they will look back in deep regret as they enter into retirement age and found they have been deprived of their hard-earned life-savings.

My advice to all Singaporeans : Look at the facts and be warned now.

The PAP cannot be entrusted to make good its promise to return your CPF savings in your old age not because PAP is inherently dirty but because PAP has embarked on an national entreprise to invest the people's CPF savings in business ventures but is now unable to turn back the wheel even though it has shown it is such an inane and ineffectual investor.

Nobody, repeat nobody in PAP now has control over how the taxpayers' money and CPF savings are being used. Not the Finance Minister, not the President of Singapore nor even Lee Kuan Yew or Lee Hsien Loong.

And why? Because PAP had long ago set and made known in no uncertain terms its policy that its investment arm Temasek - and I think also GIC - are to be run like private enterprises that brooks no interference from the government.

Do you see this sick irony? A government that is in charge of the nation's wealth, which can yet claim it is not responsible for it?

The Finance Minister Tharman said it unequivocably in Parliament during the Shin Corp saga that what happened to Temasek was none of his business.

Now he claims that that Temasek (never mind GIC for the time being) has been performing very well. You either believe his obfuscated story or the plain fact of massive losses, which with the help of Lucky's past articles anyone who can verify for himself.

My advice to Singaporeans is to emigrate if you can, so that you can withdraw all your CPF savings while there is still a chance.

Otherwise while you are still young and strong, venture abroad for a job. Whatever money you save yourself will be a thousand times safer than to leave it to PAP.

This is the danger any thinking Singaporeans with his feet on the ground cannot ignore.

Anonymous said...

Dear Mother of A Nation,

We hear your crying,
though silent in your heart.

We feel your sadness,
though calm on your face.

It is a moment,
that truth will prevail.

Nothing can hide forever,
only truth will appear.

Mother, please ......
It is time for you to speak out ..
Loudly, clearly, and forcefully.

When all have been swept under the carpet,
when all have been silenced under the curfew,
when all have been frightened under the law.....

Anonymous said...

u know guys, I think our cpf money is well and trully gone. Our govt is always quick to rebut when they have a good defensible position. Their long silence despite much finger pointing and their many schemens to lock up the cpf for every longer periods of time all point towards something very bad happening.

P.S I cannot think of any instance when the govt did not respond to serious unsubtantiated claims....

Anonymous said...

You think PAP care whether you suffer or not, emigrate or not?

For every Singaporean who thinks he is suffering or thinking of emigrating, they can find 2 or 3 foreigners willing to take his place and at a lower salary!

If need be, they can even replace as many Singaporeans as possible with foreigners! In fact they are giving citizenship to foreigners at the fastest rate than ever before!

Also with modern military tehnology, they don't even need so many soldiers to serve NS. Advances in weapons and alliance with US can serve as a deterrent.

Anonymous said...

Why care whether PAP cares or not? Just cares for yourself and your family unless you are stupid.

Anonymous said...

Temasek is Lee's personal Treasury,

All the losses are just whitewash and tip of the Iceberg of what they have taken and enriched their pockets.

They have no remorse of the loses and those people were rewarded with award and ministerial position and medals.

Every Billion they lose they must have taken more, they are also selling the country's assets with intention to bankrupt the country.

Lucky, we would be most appreciated that you investigate the national assets they sold over the years and at dubious prices.

Thanks

Anonymous said...

Lucky,it is obvious that Tharman has tailored his defence to con the Sinkie voters,especially the 66.67%.

But I dare say that more then 66.67% have been conned,most of them do not bother anyway.Well done,Tharman.you did a good con job.

But if whoever wants to declare that this great nation will become greater,then I say to hell with you.

Anonymous said...

Good - elect people who will do the right thing in the next elections.

Question - will Leong Sze Hian and Tan Kin Lian and NMP Siew stand up and be counted as those who will do the right thing?

Where to find more of such people (Scratch head?)

I will vote for Sylvia and Low TK - but I am not sure who else is deserving...

sgcynic said...

The only power I wield is my mouth and vote. You can be sure that I will use them wisely.

Anonymous said...

Sgcynic,
Me too. I live in Aljunied GRC. Will definitely vote for the opposition. Just sick of PAP and the nonsense they have been doing!Election must be near. Almost every day the Shitty Times is spinning goodies for them. "Damage Control & Service Recovery"?? Sorry lah! Too late! Singaporeans are just too fedup with this govt.!!

Anonymous said...

Minister Tharman may look like an elected member but is actually an employee of PM Lee. What he is doing is what all good loyal employees would do - stand up for his boss (and his boss's wife, in this case).

Explaining away problems has become an indispensible corporate executive's skillset. Those who are honest, bear and admit responsibilities are those who will be out of the rat race in no time. Those who can explain away problems will continue to ride the waves of high pay and bonuses, despite losses or recessions. Just look at the top people in Merill Lynch, Lehman Bros, AIG and GM.

I get shivers down my spine (literally!) when I read dumb letters such as the one in today's ST Forum (Mon 8th Jun)... telling Temasek not too shy away from risks.

Man, I guess that's the 2nd indispensable skillset... writing dumb letters just to curry flavour.

Anonymous said...

Wow, lucky...just when I thought it's all done and settled that Temasek made numerous blunders with their un-strategic gambling...along comes this letter in the Straits Times Forum:

"June 8, 2009
TEMASEK'S INVESTMENT MOVES
Don't shy away from risk
TEMASEK Holdings' track record has come under scrutiny of late after a couple of controversial steps, notably its investments in Merrill Lynch and Barclays. These investments were unfortunate, but so would be a general criticism of Temasek.

Temasek should not shy away from taking risk, particularly now.

The past 30 years have seen steady growth in the global economy. The democratisation of risk through the rise of derivatives, the growth of capital employed in active management across markets, in arbitrage and relative value as well as traditional investment, the widening and deepening of markets, have all contributed to a gradual reduction in continuous risk.

Unfortunately, it also stored up gap risk. In the period of calm preceding last year, however, the risk-reward characteristics of investments in general were deteriorating as more capital chased fewer opportunities manifesting in higher correlation between seemingly unrelated investments; the need for more leverage to eke out decreasing levels of return; and lower volatility across markets.

Risk levels got higher as risk perception got lower. In essence, risk is highest in calm waters. Once an iceberg is sighted and there is a collision, risk is converted to damage.�

Last year saw such an iceberg. Markets were no longer risky; they were damaged. For arbitrage and relative value investments, there is no better environment than damaged markets. Equities may be cheap or expensive, but given the systemic de-risking of last year, there are clearly relative value opportunities.

Mergers and acquisitions have been more active than expected as companies seek strategic acquisitions, fire sales and consolidations. Bond markets have seen a recovery in issuance and take-up has been healthy. Equity recapitalisations have been strong in emerging markets. All these are signs of a global economy healing itself.

�The timing of the disposal of Barclays and Bank of America shares may be unfortunate, but in the new world order, financial institutions are likely to be regulated as utilities with lower returns on equity.

The financial crisis represents a step change in the world order where the profligacy of the developed world is exposed and paid for over a period of decades, while the value creation and maturity of emerging markets raise productivity, economic growth and standards of living. Emerging markets are the source of demand and the source of supply of natural resources, whereas service economies in the developed world appear to be sidelined in the value chain.

Bryan Goh Yong Leng

Anonymous said...

Tartman is simply doing what his job entails, that of a running dog. All of them are there to make up the numbers and carry out dynasty's instructions, and when shit hits the fan come out and take the rap or spew crap excuses. Of course the system ensures these eunuchs are well paid and fed.

Anonymous said...

Some words of wisdom:

"As dead flies give perfume a bad smell, so a little folly outweighs wisdom and honor."

And it has been more than a little folly ...

Anonymous said...

Yo Lucky

Do u think Tharman has any sway over Ho Ching?

Or if there is anything else that he could say without causing more damage?

U are shooting the messenger and the only minister/mp left in the current cabinet with any level of competence.

Do U really want Buddha Khaw/Bargain Hen/Pinky Lee/Mentos Minister to run the economy?

Anonymous said...

I'm 100% in thought with you. So is a Eric Tan who wrote the following letter to ST Forum. The people as ultimate owners of Temasek must demand for the proper assessment and accountability. Does the Ministry of Finance as direct owner not know this already as said data should be in existent? It will be ridiculous for Temasek do its internal performance assessment on a one-result-fit-all basis, isn't it?:

June 5, 2009
ASSESSING TEMASEK'S PERFORMANCE
Split portfolio in two

I REFER to the report on the Finance Minister's response in Parliament on Temasek Holdings' performance ('Temasek beats returns of many funds', last Friday). In explaining Temasek's loss in the sale of its stake in Bank of America, Mr Tharman Shanmugaratnam mentioned that a large part of the $58 billion portfolio decline was due to the slump in market value of the 10 largest listed Temasek-linked companies in Singapore.
I understand that most of its investments in Singapore - such as in Singapore Airlines, DBS Bank, ST Engineering and SingTel - are for strategic purposes and cannot be traded to maximise returns.
We should review Temasek's performance on a portfolio basis over a period of time rather than each individual investment decision. The problem with assessing Temasek's performance is that its trading investments and national strategic investments are mingled together to form one portfolio.
I propose that the current portfolio be split in two, with one for national strategic purposes and another for trading purposes. Temasek can provide separate performance statements in its annual report for the respective funds.
The strategic portfolio would probably be static and passively managed as investments are not held for profit maximisation but for national security reasons. Ministries can decide on the need for Temasek to retain the stake in these companies.
For example, the Ministry of Defence can decide if there is a need to retain a controlling interest in ST Engineering; likewise, the Ministry of Trade and Industry can decide on the size of Temasek's stake in SIA. In this way, Temasek fund managers will not be penalised if these shares go down.
The investment portfolio would comprise all investment assets which are managed actively like a private equity fund or a mutual fund. Fund managers can actively manage this portfolio and be assessed on their performance within an investment cycle to be decided by the Ministry of Finance. They can be judged on their investment decisions in Shin Corp, Bank of China, Merrill Lynch, ABC Learning and others. We can also formally benchmark them against other similar best-in-class global funds.
In this way, we can judge Temasek's performance as an active fund manager.
Eric Tan

Anonymous said...

I got a feeling that if every S'porean is able to withdraw every dollar of their CPF savings now and together....there won't be enough for all! Probably a shortfall of a few billions.
Can someone calculate the grand total of CPF savings from the stats provided by CPF in their blog?

Anonymous said...

Hm ... does the US army own any of Boeing\Lockheed\etc?

"Strategic purpose" is BS.

Now that Ho Jinx is gone (by Oct), I hope Tharman can close down\liquidate Temasek.

Anonymous said...

'Temasek is Lee's personal Treasury, 11:46 PM'

Barings was to Nick LEEson personal treasury as Temasek is to the LEE's personal treasury.

Nick Leeson was charged and sent to jail.... In the same way, i believe we need to impeach the Lee's family for abusing our country's coffer.

1984 said...

When I think of Mr Lee & Co I can't help but remember Marcos & his cronies..... I predict that when the coffers are empty those responsible will be living overseas..

Anonymous said...

"Ai Zhi Shen, Ze Zhi qie" perhaps this is why Temasek is of so much concern by many Singaporean, despite none have benefited or sufferred directly from its gain or loss, correct me if I were wrong. Please don't be mistaken, they don't really love Temasek, they love the money that is with it. They think the money belong to the country, belong to the people and thus they hope and want the money to be entrusted in good hands. The recent exposure of Temasek ill investments have created worries, people start to doubt Temasek competency, this is absolutely normal for a capitalism world, ordinary people have nothing in their eyes but MONEY, bravo Singapore Money la Singapura!

Taishan said...

The usual problem with scholars, military officers and the entire bunch of elitist who are neither street smart nor savvy or experienced to smell a fraud.

Ever ready to part with their (in this) public monies, easily duped.

Where a taxi cab driver would easily trump a highly educated scholar.

Anonymous said...

The earlier this country goes bankrupt, the earlier YOU GET YOUR CHANGE OF REGIME that so many seem to eagerly look forward to.

So, why not let them lose everything.

Anonymous said...

It just as the same when our PM say that the increase of GST is to help the poor. I wondering what statistics he got for the past few years to substantiate the poor did benefit from the GST increase. I don't even bother to read the news on Temasek with so much fabrication or wayang that is cook up to made it look like the loss never happen.

Anonymous said...

We are getting screwed of the national reserves while they are laughing all the way to the bank. I wonder if she got 8 months bonus for her fantastice performance.We sure are a bunch of dumb folks.

Onlooker said...

It's quite amazing how Billion of dollar of loss is explained away even when the patience is wearing thin.

Anonymous said...

well look at it this way, it cud have been much worse without her. i think so. we must count our blessings, give credits when it is due! the people up there have been working tirelessly for you guys, at least say something nice to make their day.

Anonymous said...

To Anonymous 8.06 PM says:

"well look at it this way, it cud have been much worse without her. i think so. we must count our blessings, give credits when it is due! the people up there have been working tirelessly for you guys, at least say something nice to make their day."

Have you gone nuts? What do you mean they have been working tirelessly for us Singaporeans? What have they done for Singaporeans to give them any credit? The PAP eunuchs and local news have given them the thumbs up and applause and you are asking us losers to join in with a standing ovation. Get Real lol. I hope you meant it sarcastically/

Anonymous said...

hahhaaha

Anonymous said...

check out today's papers - South Korea was so impressed by our PM not flying around in a private jet. PM Lee boasted about our "govt officials flying economy, not first class, for flights below 6 hours. Wondered if he told those Korean officials about his salary? That would floor them completely! Hahaha

Anonymous said...

This is the kind of fund manager I want to work in, but never invest in.... Unfortunately we are all invested in this, and only a very small elite number are working in it who are benefiting from this kind of "heads-they-win, tails-we-lose" arrangement...

Anonymous said...

I know of some China-born Temasek scholars (got Temasek scholarship, forced to become Singaporean, went to Ivy League and won't give a damn much about staying in Singapore when bond expires).

They are trusted to play with your money while you serve NS slavery. HAHA. You get screwed by Ho Ching & foreigners.

Anonymous said...

Once upon a time in a small country, the spouse of an influential politician decided that she wants to be a hedge fund manager. Although she has a track record of bad business judgments, somehow she was continuously bestowed with greater and higher responsibilities that baffled many observers. “She is the best person for the job” her predecessor insisted. Hence, she was entrusted with billions of dollars previously squeezed by the regime from a captive citizenry.

Now, at that time, hegdefund managers were the most well compensated lot. “If this bunch of monkeys can do it, a Royal Scholar like me can beat this game of shooting fish in a barrel!” she thought to herself, as she embark on an ambitious plan to make a name for herself, and perhaps redeem part of her bruised reputation from previous failures.

As a Royal Scholar, she was definitely bright and very determined, but she lives in a world where the rules are clear, the dogmas are well established and the culture does not require nor encourage too much independent and creative thinking. At first everything went well. She doubled the hedge fund size, and proudly proclaimed that the fund has reached a new apex of $100 billion. Of course, previous little embarrassing episodes from investing in neighboring countries were conveniently ignored and overlooked. All was well, and in a country where the citizenry worships money, what better way to win respect than to beat the money game itself.

Then the rules of the game started to change. Now, do understand that only starving and unemployed philosophers think about such meta-games. In a country obsessed with result, you have engineers and accountants, doctors and lawyers, and they do not think about what could happen. Only results and facts please!

She bought heavily into a sector that she thought was selling at a discount, but fail to understand that it’s a discount because you have anchored yourself at the highest price. As the shares plunged, she was in denial and insists that they were long-term investments. She finally capitulated and puked just as the darkest night was dawning, completing a cycle of buying at the highest and selling the lowest.

Sadly, her parting shot was one where she proclaimed that she has no regret, with a publicly-elected but compliant finance minister waxing unconvincing lyrics about how well the hedge fund manager had actually performed. She, as well as her sponsors, does not understand that this is a 50 billion dollar lesson in humility.

The market does not care who you are.

Anonymous said...

He SHOULD share with the Koreans how he saved wasting 15 sticks of satay while in M'sia

Dry Humor said...

My Dear Lesser Mortals,

When I was young, my parents, like all other parents, wanted me to study hard, do well for my exams, get a degree and work in a famous company for the rest of my life. Do well I did, I even became a government scholar and took the military scholarship. This was the start to working in a famous company for the rest of my life.

After 1 to 2 years in the army, I went overseas to study on a scholarship. I had a great experience studying at a world renowned University, complete with Ski Trips and holidays. I just looked like the posters that I saw when I signed my bond.

I came back to the army, did my chores and commanded great respect from others who knew I was a scholar. I bought a private property and drove an European car shortly after. I never took public transport and lived in public housing ever again. Those slums were not worthy for me, but they definitely are good enough for those lesser mortals. $400,000 for one slum is cheap. I bought my home at $4million and I don't even consider it expensive. What is $400,000? It's like just the lowest average pay of my fellow parliament colleagues.

When I left the force, the government quickly cushioned me behind a cabinet minister in a GRC. You know, I've never really been interested in politics. Some of my good friends were sent to the GLCs and enjoyed themselves. They do not have to meet those lesser mortals, you know.

But anyway, back to the topic, since the government think I can help those lesser mortals, I shall lower myself and join the parliament. Those peasants need me! What do they know! They are not scholars like me. Instead of abusing my fellow friends with fire and chairs, they should respect us. Well, they are just jealous that we are scholars.

I heard people talking about accountability? What are they talking about. In the military, we just follow the orders. You know, a lot of things are kept against the civilians for strategic purposes. What? You mean the government must be accountable! No way man. What do those peasants know? They don't seem to care anyway. We got 67% of the electorate just by staying the same.

Efficiency? You are asking people from the military to be efficient? No. We are bureaucrats! We need to take our time to count those assets. If we want to account for them, god knows when we can finish them. But the private sector can do that? Sorry, but I've never worked in a private sector.

Public housing? Public transport? I have not had them for a long time. How would I know? Too high a salary? Please... I'm a scholar.

Understand the peasants? Oh please, if you had gone through what I've gone through, how can you understand the peasants? I demand that you peasants respect me! After all, I'm a scholar!

Yours faithfully,
Your elected Demi-God

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