Thursday, July 30, 2009

Temasek's Confusing Losses.....

In May 2009, Straits Times reported:

" portfolio value dropped $58 billion - from $185 billion to $127 billion - between end March and November last year” (”Temasek made big gains”, ST, May 28).

Er...only in a country like Singapore the newspaper has this type of headlines Temasek made big gains when it lost $58B in 8 months. Those figures were based on what Minister Tharman said in parliament.

Anyway, yesterday Ho Ching said:

In our Temasek Review last year, we reported an annual value-at-risk of almost $40 billion last March. This meant a 16 per cent probability for our portfolio value to drop more than $40 billion by March this year. Indeed, it has turned out to be so, and more.” - Ho Ching's Speech at Institute of Policy Studies.

This statement seems to imply that $40B (or more) was lost from March 08 to March 09. Ho Ching said they knew they were going to lose more $40B with a probability of 16% .Wow that is really can she tell us how much more she will lose in the next 12 months and please give us the exact probability. I have never heard of a fund manager who lost money then turn around to tell his investors that he already knew he would have losses. She is telling us that Temasek had the future all figured out and none of this is unexpected. .....meaning she has not made any mistakes and is completely blameless!

Lets summarise:

Minster Tharman : $58B losses March 08 to Nov 08.
Ho Ching : $40B(or more?) losses March 08 to March 09.

Nov 08 to March 09 : $18B gain?

By disclosing the numbers so ambiguously, it caused the WJS to report that Temasek might have recouped some losses i.e. loss fell from $58B to $40B[Link] from Nov 08 to March 09. Is this possible?

Dow Jones on 28 Nov 08 was 8830, Dow Jones on 28 March 08 was 7609....fell 14%
STI on 28 Nov 08 was 1732, STI on 31 March 2009 was1700...down 2%.

Most market indices around the world were down from Nov 08 to March 09 i.e. stocks generally fell during this period. Commodities also fell sharply during this period. So how can it be possible that Temasek recoup $18B during this period given they are so broadly diversified?

Note that Ho Ching said that Temasek lost "more than $40B". Most people take it to mean $40B-$45B. In this case, I'm not sure...and it is unlikely given what Minister Tharman told us earlier this year.

Why can't they publish quarterly reports like everyone else and save us from all this confusion? Even Leong Sze Hian is confused he thinks the $40B is year-to-date i.e. Temasek lost another $40B from the Jan 09 to March 09 (see Online Citizen "Temasek - Murky figures and unanswered questions"). While that is another plausible interpretation of Ho Ching's statement, I think it is too bleak and too horrible...they couldn't have done that badly (or could they?). If companies as big and diverse as General Electric can provide a quarterly report, why can't Temasek?

Losses is one thing. The lack of transparency is another. The sad truth is Temasek lost money and ordinary Singaporeans don't know how much....


Anonymous said...

Oh well, they pretend to know what they are doing and we pretend to believe what they say. All is well in Singapore. All you need to do is pick up the ST and you will feel good and fortunate you're a Singaporean. Life goes on.

Anonymous said...

Frankly, I don't think there is anything to compel Ministry of Finance or Temasek Holdings to be transparent. It will not happen unless there's a significant change in leadership. The incumbents have to many skeletons to stash away. Anyway, the people have long learned to read between the line. Most can guess what is going on. It's just that the price of defying the government is too high for anyone to want to do anything. The power of the state too strong to be challenged. There have been too many examples of those foolhardy ones who went against the system and lost. The government is pragmatic. The price they paid is very high for all to see. Kill the chicken to scare the monkey principal applies. The people are realistic.

Anonymous said...

As a Singaporean, you will be happier if you learn to give up on this govt. Given the way they repress dissent, there is no way to improve the country. Take care of yourself and your family. Migrate if you get the chance. That is the only way you can improve your own future.

Anonymous said...

We are lucky compared to Nuclear Power North Korea. The NK leader don't even bother to tell the citizens what happened. Ours is good that they told us what happened (to a certain extent), and it's better than what I've expected. She could have said "losses > $1".

Let count our blessings by reading and memorising the Straits Time

sgcynic said...

I have a 99.999% probability of voting against the ruling party in the upcoming election. I knew that even before the last election.

Anonymous said...

None of us know how much Temasek made or loss. But every member of the First Family's dinner table knows the answer.

They should; after all, practically all of them hold the top position of every most sensitive government/political position in Singapore Inc.

Anonymous said...

The losses not even mention in the news broadcast in CH U or CH 8 lol. I guess a broad spectrum of the general population have no idea of this losses if they don't subscribe papers or read online news.

Anonymous said...

when in doubt, plan for the worst.

sorry, folks! party is over. get ready to jump ship with your cpf monies...

the elites are not parking their ill-gotten millions overseas for nothing...

Anonymous said...

After i read the news yesterday, i am totally confused.

The 2 figures are very confusing.
1. $40b and 16%
2. $185 drop to $127b

i dont see how these 2 set of figures connect. If they are directly related why show 2 figures?

I ask a few of my friends, none of them know what is the exact figure we have now. In fact some even said it is the worst figure, $185 drop to $127b, then now drop another $40b which left with $87b.

Cant believe they give such confusing info to the public, or is there something they want to hide?

And btw, what is the Negative Bonus they are talking about and how does it work?

Taishan said...

Proves beyond a doubt:

Ho Ching is incompetent,
and absolutely incompetent !

Anonymous said...

As long as the serfs are not rioting, and sgcynic still thinks he might vote for PAP then Ho Ching has met her KPI. Give her a bonus!

Anonymous said...

If they know they are going to lose $40B a year ago, why didn't they do something about it then to mitigate the loses?

Singaporean are paying them big peanut for doing nothing!

chainsawieldinun said...

Actually, the crucial line lies after the numbers:

"This meant a 16 per cent probability for our portfolio value to drop more than $40 billion by March this year. Indeed, it has turned out to be so, and more.”

Anonymous said...

As the saying goes, if you cannot convince, confuse. This is exactly what the mainstream media is doing. MOF and Temasek probably made separate statements and our toady media is so chickenshit they dared not ask either to clarify or elaborate on their statements. So meekly back to their desk they went and try to spin something for the masses. Our mainstream media is nothing more than a propaganda machine. Then again I guess everyone knows that already. Anyway, Ho Ching staying on to run Temasek is a bad decision. Unfortunately, it's the nation who will be paying for the bad decision. She will be laughing all the way to the bank. Her ancestors must have done a lot of good for her to have such good karma. Despite the monumental mistakes made, she still can keep her job. I wonder if she is the laughing stock of the investment community. She probably thinks she's on par with legends like Warren Buffet or George Soros. Playing the big stakes. Except these guys have long track record success. She has record of a different kind. I guess Singapore run of good luck ends here.

Ender said...

Ho Ching is finance-challenged. During the meltdown, risk models are either discarded, tweaked or have their assumptions questioned because the basis on which the risks are modeled on have changed. Were structural changes caused by the CDS risks ever factored into the model? Even banks have problems valuing the portfolio of their HNW clients. Now Ho Ching, with the majesty of a fake expert, tells us the findings of the previous risk model and added some gobbledygook into the mix to try to assure us that they know what they were doing when they actually did not. If the probability of losing $40 billion is 16%, what was the probability of actually making some money, according to her risk model? She has failed to enlighten us on this point.

Anonymous said...

Only in Singapore can a enginner by training, running or allowing a successful manufacturer to fail and go on to run another huge government owned enginneering company and finnaly be parachuted to run a billion dollar investment firm. This is meritocracy at the best...

Anonymous said...

The other day a friend was talking about Ho Ching and someone who misheard it asked why he was talking about "Ho Sin" which means housefly in dialect.

We had a good laugh but then come to think of it's kind of appropriate don't you think so?

One dictionary definition of housefly: "Insect that spreads many diseases"

Anonymous said...

Sell Bank of America at $3+, VAR of 40 bil!
Y not distribute the 40 bil to every Singaporean...

too-scared-to-be-named said...

People, Lee Ching should be sacked. She does not have even the basic knowledge of risk management to lead Temasek. And she totally exposed this today by saying :

'In our Temasek Review last year, we reported an annual value-at-risk of almost $40 billion last March. This meant a 16 per cent probability for our portfolio value to drop more than $40 billion by March this year. Indeed, it has turned out to be so, and more,' said Ms Ho in her speech.

Not a risk person myself, I still sensed something was wrong. So I checked with a professional risk manager friend of mine, and he rubbished her statement. He said she probably got fed the info from her kakia that they operate with a 16%, 40billion VAR, which is traditionally a 99% Confidence Interval, or thereabouts, meaning in the tail event of 1% chance, which did happen this time, they would lose 40 billion, unless Temasek operates on a 84% Confidence Interval VAR, which is actually scarier than the prospect that Lee Ching does not know her risk management ABCs.

Anyway, keep a lookout for my friend's professional analysis of her statement on his blog sgpirategame. The article is being written right now as we speak. But he is busy with risk managing his bank's books so it might take a while. Look out for it!

Anonymous said...

the whole board is incompetent.

includes GIC board...

Anonymous said...

If Temasek lost $1 billion every day from January 1 to December 30 but made $1 billion on December 31. Shitty Times will not report that Temasek lost $363 billion for the year, the headlines will be "Temasek made $1 billion in one single day!".

Fievel said...

What negative bonus are they talking about? Based on watermark, this 40billion loss should eliminate bonus being ever mentioned at Temasek for the next 20 yrs man!

Anonymous said...

I think no one in Temasek Holdings / Ministry of Finance / President knows what is the amount lost either -

Recall what the govt says to President Ong Teng Cheong - you think anything has changed :)

Anonymous said...

To really come out and tell the world they lost money is losing face.

We're talking about the PAP govt here. Loss of face can never be accepted.

So they'd rather live with the vagueness. They probably give a clearer picture only to those stakeholders who bought bonds with them.

But for the common citizen, who are we to judge and challenge the daughter-in-law of LKY? we are not worthy.

Anonymous said...

"Sell Bank of America at $3+, VAR of 40 bil!
Y not distribute the 40 bil to every Singaporean..."

Let me guess, LKY is Advisor of Citicorp paid let me guess again US$100M a year for that.

Arhhh, that's chicken feed if the Western banking industry can make him donate, yes donate not invest as they claim, some US$30B to the troubled banking group: Merrill Lynch, UBS, Barclays, CitiBank etc.

Well the true amount of tribute PAP coughed up to please the money masters in bent knees is probably much higher.

The Western banks are brothers-in-arms, even Obama is facing disobedience from them despite bailing them out. The bankers are back to their super pay, even higher than before the subprime crisis. It's in the news lately.

Even Lehman Brothers failure was really overseen and planned by its fellow mega banks like JPMorgan Chase & Company not to mention the Bush Administration. Link

Hey brothers and sisters, the world is controlled by these capitalists at the top level. LKY and PAP kowtow to them and get great benefits in return.

This is how it works. Otherwise how do you explain that our top politician MM is working for a private bank Citicorp as Advisor.

Anonymous said...

a couple of things here:

- when Ho Ching was appointed CEO, i remember commenting on some blogs that a technocrat, who used to run a defence dept in MINDEF, would be ill-equipped to run a diversified company like Temasek. She never was in business before. Dealings of the levels Temasek does, require someone with business nuance and cunning, and experience.

- How do they overcome this? they used outsourced consultants who helped them buy into "great" investments such as Shin Corp and ABC Learning. Middle managers are all yes-men who'll agree with whatever the top people say. Who wants to disagree, or dares to, with Ho Ching or Finance Minister or LHL or LKY, right? (Look at Goodyear and see how long he lasted!)

- And i suspect, that Ho Ching and senior execs at Temasek are emotionally linked to their investments. They feel hard to let go when the portfolios are sinking. which brings us back to the original point, you need someone with market cunning, nuance and sophistication to handle the business dealings at those highest levels.

Anonymous said...

That's why people like Ho Ching can never survive in the true corporate world. She wouldn't last a week in the real world. She lives in this fantasy world created by her father-in-law paid for by the people. She believes she is like Warren Buffet who makes shrewd, perfectly time investments. She dreams of growing her investments by a hundred fold, or even a thousand fold. Then people will view her in awe. She lusts for the title of being the most powerful woman in the world. How long is this delusion with grandeur going to last? It's easy to gamble when it's not your own money at stake.

Anonymous said...

I think enough have been said. I think it is time to take a step back and ask ourselves what do all this mean, for us and for Singapore, and to see the bigger picture.

If things right at the very top - and we are most likely just shown some little specks of the tip of the iceberg (and thus the need for speculations and rumours, which are flicked away with a twitch of a finger) - and where all the focus, emphasis and talent have been concentrated, are so muddled and obscured, and never able to get right, what do you think is really going on inside the government, the true story within, the potentially shocking extent of the rot deep in the heart, and perhaps even everywhere else, even from HDB to SAF, from Capital Land to SPC, from PSA to SIA, within the Police, the ISD (remember Mat Selamat?), etc etc

Anonymous said...

@Anon at 11:34

Ho Sing is Ho Ching's brother:

Anonymous said...

I don't Ho Ching wanted the job in the first place; she had no choice as the LKY's daughter in law. Well just like Devan Nair & Ong Teng Cheong was "given" the Presidency but really to cold storage them.

Ho Ching is different because LKY has other purpose for her; if you have someone related would she dare to betray his confidence.

If LKY said put US$30B in failing American banks she would just obey. After all their fates hang together.

Ask also why the Finance Minister post was held by his son Loong the PM for so long before a yes-man Tharman who disclaimed all responsibility about Temasek's investments was willing to take over. Yes, Tharman said it in Parliament unequivocably :"It is not my problem" when questioned by an MP about Shin Corp case.

LKY - a "victim of his past" as one American media pointedly described him - is playing a game of intrigue all the time whether it be money matters or security. As to the latter he surrounds himself with like 25 bodyguards when he moves around each staring fiercely at ordinary people like they were walking through suicide bomber infested country.

The more he plays with intrigue, opaqueness and secrecy the greater the rot inside. This was what all dictatorships like former communist states learnt the hard way.

LKY believes it works differently for him. That's left to be seen after his departure, just like what happened when Mao died. All the dirt came out.

All these will not matter to Singaporeans but for the fact that great harm is being done to the people, not the least to Singapore international reserves and their own CPF life savings which are now in doubtful state. Nobody knows exactly what is going on about such things.

Anonymous said...

Whatever Temasek losses, most important is your personal money is not lost, like through Minibonds, stock speculation, get rich schemes, gambling etc, etc.

Once your personal money is intact and growing and also quite a big sum, then Singapore is quite OK to live in.

I suppose 66% are like that, so life is quite OK for them in Singapore and they showed through their vote.

Amazingly this percentage is quite constant throughout 44 years.

Anonymous said...

One reason the electoral support for PAP is quite stable over the last 40 years as previous reader just pointed out is explainable in part to the many & growing GLCs. Those under GLCs' employement tend to vote for PAP not necessarily out of fear. It is like you work for a company and are you going to cause trouble to it?

So PAP has this strategy of enlarging not only its political space but also corporate space in Singapore.

So die die PAP must have these GLCs.

Furthermore those companies that get their business from the government and GLCs also tend to support it.

In other words the wider the web of connection the more stable PAP is.

Anonymous said...

Despite all the losses..

USD/SGD $1.45
District 11 apartment $2200psf
HDB 5 room $500,000
STI Index 2630

What to complain about ??

Anonymous said...

"I don't (think/suppose?) Ho Ching wanted the job in the first place; she had no choice as the LKY's daughter in law. "

Well I rather think or conjecture that it was a political marriage right from the beginning. And Ho Ching had a choice to be or not to be the daughter-in-law.

It ought to be obvious that some Lee was required to manage Temasek/GIC - which by then was already full of skeletons and other dead and dying bodies - and the other children didnt want it, which is itself something to ponder.

And so they - ie all the relevant apparatus of state - scanned the whole country and picked Ho Ching, who was, amongst other things, an unmarried woman, so that she can be married to the then widower LHL, and thereby becoming family and Lee.

Alexis de Tocqueville said...

Temasek and Ho Ching are now the butt of jokes around financial circles.
Nothing will change in Singapore at least until lee kuan yew dies.
Then maybe there will be light, hope. But until the old fox is alive, nothing will change.
Until then, the elite will continue to lie, to spin, to tell you what to do, what to think, what to eat, what to read...
The elite will get richer and the common singaporean poorer.
What amazes me is to see how singaporeans are getting screwed (literally) by the governement on a daily basis, and no one complains. Simply amazing.

Anonymous said...

If you read some of the largely historical novels of China like "Romance of the 3 Kingdoms" & "Water Margin", you might wonder why except for criminals and rebels, people in those days were so submissive as to treat the Emperor as their great benefactor, even though in reality they were the ones who created the wealth for the nation.

That misconception was overthrown when democracy which aptly means "people is/as the master" in Chinese came to the scene. For this reason even though China is still a dictatorship its leaders admit - even if it is only verbally - that democracy is correct.

Nonetheless, in Singapore PAP undermined democracy in quite an interesting way. First it does this by taking monopoly of land and public housing.

Then it involves itself extensively in commerce through GLCs.

I don't know who gave LKY this feudalistic idea but he probably had it in his blood, his great grandfather being an official in the Ching Dynasty as he tells us in his autobiography.

Anyway it all started out in the 60's when kampongs were forcibly resettled and the land taken possession by the govt.

Today these empty state land are everywhere to be seen and when a commercial developer wants to use it, it has to pay premium price - Raffles Place price as some people pointed out (according to an LTA statement?).

Given this monopoly on land, publlic housing and commercial network/monopoly/oligopoly people are reconnected to the "Rome" as the saying goes "All roads lead to Rome".

They can see that their livelihood is tied, dependent or forced to kowtow to the "Sovereign" so to speak.

Given this relationship and if one is working or benefitting from the web of PAP's network, you can imagine the subtle "subject of the state" mentality that is created thereby.

Of course I am not saying everyone in such a relationship is like that; just that the more radical, independent thinkers are always exceptions rather than the rule.

Anonymous said...

The reality is not that they do not have the ability to give the true picture with all the expertise at their disposal.

The reality is that the figures are purposely trotted out to confuse Singaporeans. The more blury the picture the easier to get away with murder.

They say divide and conquer. This is confuse and contain.

Not the 1st Pirate said...

Here is my explanation of the $40b comment. Hope it can clear up some of the confusion. I think they really think the rest of us out there are stupid peasants and we don't really have to tell them anything. Just some rubbish in the straits times will do. Shocking!

Anonymous said...

"They say divide and conquer. This is confuse and contain.'

But that begs the question, why?

Why do they have to obfuscate when they have so proudly and so frequently proclaimed to all the world - and hammered unceasingly into its obedient citizens - that the PAP is nothing but full of men and women of integrity, honesty and love of the country and people, etc, etc.

That someone obscures, camouflages and conceals can only lead to notions that there are things you are not so proud of. And in the official manual, secrets are things that are detrimental to the country. So the more secrets you keep the more concerned everyone ought to be. It is understandable and necessary that you keep secrets from your enemies. But are your people your enemies too?

What then do we believe? That which was sparingly said and spun, or rather our own disturbing and disquieting but honest thoughts within us, that inevitably surface to fill up all the gaps and inconsistences between what is said and what is seen, or unseen?

Anonymous said...

"Despite all the losses..

USD/SGD $1.45
District 11 apartment $2200psf
HDB 5 room $500,000
STI Index 2630

What to complain about ??"

The quinessential prostitute: get screwed and no complains for you get your money.

But alas it seems that 66.6% of Singapore are prostitutes.

Alfred said...

in the next GE,

a SPOILT VOTE = a vote for the PAP.

if you really dont want to vote for the PAP, tick on the opposition no matter how inept you think the opposition is.

Onlooker said...

It is only confusing when the fun holders want to smoke the losses.

The selling of public assets and other actions they took do not sit well with a lot of people.

Can PAP still be the People Action Party when the action they took are detrimental to the people they are suppose to serve?

Those losses could have been invested in local businesses to buffer them from this recession instead these money had became the exorbitant "top" salary of the "alpha" males who cannot face the fact that they had destroy the US economy and are still in the process of being bailout.

Is this an example of "Meritocracy" ?
top $dollar for top idiots?

Anonymous said...

Obviously, there are some people up there who cant count well. They should upgrade their calculators.

Anonymous said...

Ho Ching was once voted to be one of the top 10 influential women in the world.

Today she can only influence Lee Hsien Loong's Dick and I doubt so, it like screwing a tranny.

Anonymous said...

PAP will still continue to rule. Who dare to stop them despite all these mistakes? They are almost invincible.

Anonymous said...

Jim Rogers said the Dow might go to 100,000 thanks to Banana Bens inflating skills. At MAS rate of expanding money supply (25% p.a.), it takes only 11 years of such inflation to get Dow from 8200 to 100,000. States Times Index at 30,000? Sure!

Whereas 1 cent could buy a meal at independence, by 2020 a hawker center meal would probably cost $100. PAP will call it progress and increase PM salary to $100m, elderly peasants will continue committing suicide, life goes on.

The elite in every society has always managed to do well. The weaker members of society are wiped out. Thats how it has always worked. What happens when you get an overpopulated little island with extremely limited resources and keep on overpopulating this island? Darwinism at its best.

Thanks to the FAP, Singapores population has been rising at roughly 3% p.a. for the past 2 decades. Extrapolating to the next 4 decades, by 2050 we will have 15 million. Is that unthinkable? I think not, since we will still be less densely populated than Macau. At most the Good Class Bungalows will be worth in the range of $1 million psf (inflation adjusted from NY real estate prices at $10,000 psf in 2008 and Tokyo real estate at $10,000 psf in 1988), so anyone who lives in a GCB is guaranteed to be a multi-billionaire. The peasants will be crowded into hundred storey HDBs (theyre already considering 70 storey HDBs, right?), MRT will be built to 3 or 4 levels (they are already building dual level MRTs).

While my above seems to be science fiction, I personally see it as the most likely outcome if nothing changes. Singapores GLCs and Elites have no real entrepreneurial or technical skills. They depend too much on rent-seeking behavior (i.e. rentals) to survive. And they are incredibly greedy. To keep increasing their profits, they must keep increasing the population. They have no other way to make money. So they must keep encouraging every criminal and gambler and tax evader on the planet to crowd in here. When GLC developers run out of land, they will either confiscate it and pay pennies, or they will invent new excuses to confiscate land indirectly.

E.g. I believe in less than 20 years (once Chinese and Indian economies really start to dominate and wealthy Chinese and Indians come here to buy property) FAP will start confiscating old HDBs under the pretext of upgrading. It will invent the concept of en bloc for entire landed neighborhoods, where entire landed neighborhoods for lesser mortals (e.g. terrace houses) can be forcibly sold to Capitaland to convert into super tall luxury apartments. It will crowd the peasants into ultra high, ultra expensive slums so that FTs can come here for banking services, seek medical treatment, obtain education, get listed on the stock market, gamble in casinos, and live well in luxurious apartments.

LuckySingaporean said...

anon 00:09,

Yes, printing loads of money can make the DOW go to 100,000...and an apple will cost $20.

I noticed that commodity prices are rising much faster than the economic recovery which remain sluggish. If the economy gets back up, the price of goods will go disproportionately higher and that will take out the benefit of an economic recovery. You have your job but can buy much less than what you could before.

If Bernanke can't sterilise the money the Fed printed, the inflation will be more painful than the recession.

chekhovian said...

It behooves us as citizens of this country, people who grow up in and genuinely care about this country, not to let it go to the dogs.

It is a foregone conclusion the PAP will win the next election. But what about the next and after that the next? Surely something has to give.

For a start, let us speak to our loved ones and friends and start spreading the gospel. Ratiocinate with them why they should not cast that vote for PAP, and giving them a blank cheque into parliament.

Vote more opposition into Parliament so that a stronger alternative voice can check the singular tyrannical rumble of a despot.

When push comes to shove, tick the opposition box when you are standing at the ballot. Translate our seething anger into physical and real action.

Anonymous said...

But alas it seems that 66.6% of Singapore are prostitutes.

Spot on mate. Singaporeans are paying premium for everything. cars, property, you name it...
And it all goes to inflate the pockets of King Lee so his daughter in law can lose it on the market...
What's that I feel up my arse?

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The guy is definitely just, and there's no doubt.