Temasek Holdings: Once Bitten Not Shy!

Saw this article on Temasek. Temasek to invest in Western banks 'if opportunity comes'

• SINGAPORE: Singapore investment firm Temasek Holdings said yesterday it had not been put off investing in Western financial institutions despite suffering massive losses from the global financial crisis.
  
  It would invest in such banks "if the opportunity comes and it looks attractive, yes," Ho Ching, chief executive of the state-linked firm, said, adding that the fund was also interested in resources as an asset class and saw opportunities in Asian infrastructure.
  
  She, however, ruled out investing in overseas land for agriculture, as firms linked to South Korea and Middle Eastern firms have done in recent years.
  
  Ho was speaking at the launch yesterday of Temasek's updated charter that described the fund as an investment firm managed on commercial principles, dropping a reference to its role to improve the city-state's economic base.
  
  Temasek suffered massive losses after pumping billions into Western financial companies that were in need of a capital injection as the economic crisis unfolded.
  
  It took a stake in Wall Street icon Merrill Lynch but when the US firm was bought by Bank of America, Temsek divested its interest. It also bought into British lender Barclays but later also offloaded that stake.
  
  It is estimated Temasek lost more than US$5.4 billion (US$1 = RM3.51) from the sale of its holdings in the two banks, Dow Jones Newswires quoted sources as saying.
  
  Temasek made its divestments just before the global markets made a recovery at the start of the year.
  
  Ho, the wife of Prime Minister Lee Hsien Loong, said last month that by the end of March Temasek's portfolio had lost more than S$40 billion (S$1 = RM2.44) compared with a year ago.
  
  Temasek and the Government of Singapore Investment Corp (GIC) are the city-state's main investment vehicles.
  
  GIC also invested massively in US banking giant Citigroup and Swiss bank UBS as the global financial crisis unfolded.
  
  Temasek downplayed its links to government policy or strategic interests in its revised charter.
  
  "Temasek felt the need to emphasise its independence, or perhaps it is preparing to spin itself off as a truly independent unit... countries are resistant to investments by politically-linked entities," said David Cohen, director of Asian economic forecasting at Action Economics here.
  
  Temasek, which has published annual reports since 2004, now describes itself as an investment firm creating long-term value for its shareholder, after being set up in 1974 to hold investments in state firms.
  
  The updated charter did not include the notes accompanying the first 2002 version stating the government - through Temasek - needed to own and control firms deemed critical to the city-state's security, economic well-being or public policy.
  
  "There are very few of these companies left in our stable," said Ho. "We are an investor that is prepared to invest and divest." - Agencies

Waaaa..... isn't this such bold talk?

I wonder if she remembers some of these... One Of The Worst Investments In This Period!

Or how about Barclays: A Tale Of Two Investors - Temasek Holdings and Sheikh Mansour?

Other postings: here

Barclays: A Tale Of Two Investors - Temasek Holdings and Sheikh Mansour

On the right corner we have Manchester City's boss' £1.5bn Barclays share deal

• Manchester City owner Sheikh Mansour Bin Zayed Al Nahyan made nearly £1.5billion profit after selling shares in Barclays yesterday.
  
  The bank's biggest Middle East investor International Petroleum Investment Company, headed by the billionaire boss, sold a near 12 per cent stake.
  
  Barclays turned to Abu Dhabi and Qatar for financial help last autumn at the height of the financial crisis.
  
  The sheikh bought £2billion of convertible notes which could be changed into Barclays shares at 153p. These were sold for 265p.
  
  But investors took news of the sale badly and the bank's shares promptly plummeted more than 13 per cent.

And no wonder Sheikh Mansour is a happy camper!

Investing works!

However one the other corner, we have poor old Temasek Holdings!

Yeah, Temasek again.

They were just featured recently and was awarded the "One Of The Worst Investments In This Period!" by David Faber on CNBC.

According to WSJ article, Temasek got hit big time again!

Double ouch!

Temasek Sells Barclays Stake At $850M Loss

• SINGAPORE (Dow Jones)--Singapore's Temasek Holdings Pte. has sold its entire stake in Barclays PLC (BCS), booking a loss of around $850 million from the investment, people familiar with the situation said Wednesday.
  
  Temasek sold the stake of about 2% mostly in December and January, the people told Dow Jones Newswires.
  
  The state-owned investment company had invested over GBP1 billion ($1.66 billion) in Barclays, starting in July 2007.
  
  Temasek's loss is in contrast to gains another Barclays investor will make from selling part of his stake in the U.K. bank.
  
  On Monday, Sheik Mansour Bin Zayed Al Nahyan, a member of Abu Dhabi's royal family, announced plans to sell 1.3 billion Barclays shares, resulting in a gain of GBP1.5 billion from the original investment of about GBP2 billion.
  
  According to a person familiar with the situation, Temasek's exit from Barclays "is in line with its plan to concentrate more on Asia."
  
  Earlier this year, the Singapore firm sold its 3.8% stake in Bank of America Corp. (BAC). That sale resulted in a loss of about $4.6 billion, according to people familiar with the situation.
  
  Temasek said it sold the Bank of America shares to balance "risks against opportunities."
  
  Both Temasek and Barclays declined to comment on the stake sale in the U.K. bank.

Ouch!

One Of The Worst Investments In This Period!

Was reading the following blog posting on Temasek and it's wall of fame or is it shame investment in Bank Of America. This is Becoming Hilarious - and Shameful!!

Love the two charts posted.

Some issues worth noting.

• What else could you possibly deduce from the fact that Bank of America’s shares have surged 74% since our dear Ho Ching & company decided to divest of their BoA shares?

The blogger, : inspir3d, highlights a New York Times article which has some rather strong comments.

• Regarding Temasek’s decision to sell BofA shares near the low - perhaps sovereign wealth fund managers are really just government bureaucrats masquerading as fund managers? If anyone is going to take a loss on an investment - I’m glad it’s them.
  — Posted by Jay Young
• Temasek is run by Ho Ching, Lee Kuan Yew’s daughter in law. The GIC, which is the other Singapore Govt SWF is run by Lee Kuan Yew. His son is Prime Minister. No transparency, no accounts. Its a little traditional Chinese family business. Out of their league. They need professionals, and a new business model; not family members.
  — Posted by raoul hernandez

And of course CNBC's Faber Report caught wind of the happening and brands it "One of the worst investments in this period!"

( See also Temasek Admits To Their Terrible Investing Mistake In Bank Of America By Cutting Losses! )

Temasek Admits To Their Terrible Investing Mistake In Bank Of America By Cutting Losses!

Just saw this news clip: Temasek sells BOA stake

• SINGAPORE'S state-owned investment vehicle Temasek Holdings said today that it has sold its entire stake in the Bank of America.
  
  A Temasek spokesman said: 'We have divested our shares in Bank of America.'
  
  The Straits Times understands the sale was done via a series of transactions in the first quarter of this year.
  
  Temasek declined to reveal the average price it got for its 188.8 million shares, but preliminary estimates put the potential loss at a whopping US$4.26 billion.
  
  Temasek had paid about US$5.9 billion for a 13.7 per cent stake in Merrill Lynch since December 2007, which was converted into Bank of America stock following the completion of the acquisition. This gave it a stake of some 188.8 million Bank of America shares, or about 3.8 per cent.
  
  Reuters cited a source briefed on the deal saying that the shares were sold for between US$2.53 and US$14.81 in the first quarter.
  
  Based on a Reuters calculation which assumed an average price of US$8.67, Temasek may have suffered a loss of about US$4.26 billion.
  
  Temasek's net portfolio value dropped 31 per cent between March 31 and Nov 30 last year, from $185 billion to $127 billion.
  

This reminded me of the posting dated Friday, February 20, 2009, Singapore GIC Investment Mistake In Citigroup And UBS ( Do read the highlighted link, “Substantial Long-term Returns” From Bank Investments? Fat Hope, GIC )

• Anyway I am thinking out loud here. My thinking could be obviously flawed but I cannot stop wondering about Singapore GIC. What are they thinking? Obviously Citigroup and UBS were terrible mistakes and they paid some terribly high prices for their mistakes. So why couldn't they just admit they made a terrible mistake and realise their losses? Why can't they cut loss? Why insist on taking this long term approach? Don't they realise that holding them long term solves nothing? Long term investors? They look like long term mistake holders!

Well looks like they are finally admitting to their terrible investing mistake in Bank Of America. Bravo! It takes a big man to admit to their mistakes man!

ps: see also Neptune Orient Lines (NOL) Suffers Huge Losses - Big Ouch For Temasek! and Temasek Holdings Chalking Up Massive Paper Losses Everywhere!

Comments Made By Lee Kuan Yew Last Year On Singapore Sovereign Fund

The following clip was posted last April 2008. It features Lee Kuan Yew who talks about Singapore sovereign wealth fund.

Should they have been more conservative?

LKY: "The franchise of the banks, the expertise that they have, under proper leadership, they will be able to recover and rise again ... Will there be another Swiss bank like UBS for wealth management? I doubt it, we doubt it, that is why we invested in it." Citigroup, he added, had an enormous spread worldwide as a retail bank".

LOL!

Another Swiss bank like UBS?

Will there be a UBS? And what about Citigroup?

Everyone wanted to be a 'Warren Buffett'.

*whistle*

Singapore GIC Investment Mistake In Citigroup And UBS

I was searching the net for comments written on Singapore's GIC losses in Citigroup and UBS.

I came upon the following article posted, “Substantial Long-term Returns” From Bank Investments? Fat Hope, GIC

Give it a read, it's rather interesting. :D

Anyway I am thinking out loud here. My thinking could be obviously flawed but I cannot stop wondering about Singapore GIC. What are they thinking? Obviously Citigroup and UBS were terrible mistakes and they paid some terribly high prices for their mistakes. So why couldn't they just admit they made a terrible mistake and realise their losses? Why can't they cut loss? Why insist on taking this long term approach? Don't they realise that holding them long term solves nothing? Long term investors? They look like long term mistake holders!

Just my flawed opinion. :p2

Neptune Orient Lines (NOL) Suffers Huge Losses - Big Ouch For Temasek!

Here's another significant set of news.

• Neptune Orient Predicts 2009 Loss as Recession Damps Trade
  
  By Chan Sue Ling and Seonjin Cha
  
  Feb. 10 (Bloomberg) -- Neptune Orient Lines Ltd., Southeast Asia’s biggest container carrier, said it will report a loss this year as the global recession damps demand for transporting Asian- made goods.
  
  The company had a net loss of $149 million in the fourth quarter of last year compared with a profit of $196 million a year earlier, it said in a statement today. It’s the first quarterly deficit in six years. The Singapore-based shipping line didn’t elaborate on the loss prediction.
  
  Neptune Orient’s cargo fell 14 percent in the last quarter as the global recession cut demand to move Asian-made toys and furniture. The worst economic crisis since the Great Depression has hammered rates, prompting Neptune Orient, A.P. Moeller-Maersk A/S and other lines to take vessels out of service, cut routes and eliminate jobs.
  
  “The container-shipping industry is just starting to get worse,” said Um Kyung A, an analyst at Shinyoung Securities Co. in Seoul. “There’s no guarantee we can see a recovery in the second half.”
  
  Neptune Orient’s fourth-quarter results included $72 million of “restructuring charges,” which comprised costs for eliminating some jobs, Cedric Foo, chief financial officer, told reporters after the results. An annual net loss would be the first in seven years, according to data compiled by Bloomberg.
  
  Neptune Orient gained 5.1 percent to S$1.24 at the close of trading in Singapore today. The results were announced after the stock market closed for trading. The stock tumbled 71 percent last year, the biggest annual drop in at least two decades, according to Bloomberg data.
  
  ‘Pronounced Downturn’
  
  APL Ltd., Neptune Orient’s container-shipping unit, carried 574,300 forty-foot equivalent boxes in the three months ended Dec. 26, based on company filings. Average container freight rates gained 7.2 percent in the quarter to $3,077 per forty-foot equivalent unit.
  
  “Container-shipping and related businesses are in the midst of a pronounced downturn which is expected to extend through 2009,” the company said. “Reduced consumer demand worldwide, coupled with excess supply of new vessel tonnage is creating a very difficult business environment.”
  
  No Growth
  
  The global economy will show little or no growth this year as more than $2 trillion of bad assets in the U.S. help sink economies from Russia to the U.K., the International Monetary Fund said Jan. 28. Consumer spending in the U.S. fell in December for a record sixth consecutive month, capping the worst year since 1961, as companies slashed 2.6 million jobs last year.
  
  “Freight rates have dropped and volume growth this year is much worse than expected,” said Ryu Jae Hyun, an analyst at Mirae Asset Securities Co. in Hong Kong. Rates could fall by 35 percent this year and 7 percent in 2010, HSBC Holdings Plc analysts Azura Shahrim and Mark Webb wrote in a Jan. 15 report.
  
  Neptune Orient said in November it planned to slash 1,000 jobs, or 9.1 percent of its workforce, due to weakening demand and a “grim” profit outlook.
  
  The company expected that the job cuts, mostly in North America, would lower fourth-quarter earnings by about $33 million. It also pared capacity on the Asia-Europe and transpacific routes by 25 percent and 20 percent.
  
  Neptune Orient said new vessel commitments, both owned and chartered, total 28 with deliveries due to begin this year. Some deliveries have been pushed back to 2012, Eng Aik Meng, president of the liner division, said at a press conference today. The company may also return some ships to owners as charters expire, depending on demand, he added. As at December, the company had idled 12 ships.
  
  The company plans to pay a total dividend of 8 Singapore cents a share for 2008 and will give annual payouts of 20 percent of net profit going forward.

Source: here

Here is the chart of NOL.

And guess what?

Business Times carried a snippet of this news. Neptune Orient Lines swings into the red

• SINGAPORE: Singapore container shipper Neptune Orient Lines swung to a loss in the fourth quarter following a slump in cargo volumes due to the global economic downturn.
  
  NOL, 66 per cent-owned by state investor Temasek, posted US$149 million (US$1 = RM3.59) in net loss for the three months ended December 31, compared to a net profit of US$196 million a year ago. NOL a loss for 2009. — Reuters

NOL is 66 per cent-owned by state investor Temasek????

Big Ouch yet again for Temasek!

See also this posting: Temasek Holdings Chalking Up Massive Paper Losses Everywhere!

On Star Business: Temasek portfolio 31% down in eight months: Report

• SINGAPORE: The portfolio of Singapore sovereign wealth fund Temasek Holdings, which helped bail out Wall Street icon Merrill Lynch, fell 31% over eight months last year, a minister said yesterday, according to local radio.
  
  The report followed Temasek’s announcement last Friday that the wife of Singapore’s prime minister will step down after five years as chief executive of Temasek, one of the world’s largest sovereign wealth funds.
  
  Senior Minister of State for Finance Lim Hwee Hua told parliament that Temasek’s portfolio of investments fell to S$127bil (US$84.7bil), 31% down from S$185bil, in the eight months to the end of November, 938Live radio reported.
  
  But Lim said the fall in Temasek’s portfolio value was less than declines in two stock indices, including the MSCI Singapore Index, which she said dropped 44% in Singapore dollar terms over the same period, the report said.
  
  The departure of Temasek chief executive Ho Ching, wife of Prime Minister Lee Hsien Loong, comes amid questions over some of its investments, most recently the billions pumped into former US investment bank Merrill Lynch since December 2007.
  
  Merrill Lynch suffered massive losses from high-risk US subprime mortgage investments, and Bank of America acquired it on Jan 1 after fears rose over whether the Wall Street firm would survive.
  
  Last August Temasek announced that in the year to March its portfolio rose in value to S$185bil, up 13% from the previous year.
  
  It also reported a record profit of S$18.2bil for the year.
  
  Lim was responding in parliament to queries about how the global financial crisis has affected Temasek and the country’s other sovereign wealth fund, the Government of Singapore Investment Corp (GIC).
  
  In late 2007 and early last year GIC injected billions of dollars into Swiss bank UBS as well as US banking giant Citigroup, both of which suffered massive losses from US subprime, or higher-risk, mortgage investments.
  
  Subprime troubles later evolved into the worldwide financial slowdown.
  
  UBS Tuesday posted an annual loss of US$17bil, the largest in Swiss corporate history, and announced 2,000 new job cuts.
  
  Lim said this was not the first time GIC and Temasek have seen major declines in markets.
  
  ”In spite of these market gyrations, including the current downturn, for the 20-year period to late 2008 Temasek had achieved annualised returns of about 13% ,” she said on 938Live.– AFP
  
  ”GIC, which has a more diversified and conservative portfolio, has also had creditable returns over the 20-year period.”
  
  GIC, one of the world’s largest sovereign wealth funds, in September said its nominal rate of return over the past 20 years was 7.8% in US dollar terms.
  
  Sovereign wealth funds are a form of government-created investment vehicle.
  
  Lim said GIC and Temasek had the resources to weather ups and downs over multiple economic and market cycles.
  
  Temasek chairman S. Dhanabalan insisted Friday there was no connection between Ho’s departure and the Merrill Lynch stake, or an earlier controversial venture into Thailand’s Shin Corp.
  

Temasek Holdings Chalking Up Massive Paper Losses Everywhere!

Interesting write on Asia Sentinel: Singapore's Temasek Stumbles Again

• The island republic's premier sovereign wealth fund takes another massive writeoff
  
  Although global markets have stabilized at least temporarily over the last couple of weeks, there is no sign of a letup for Temasek, the Singapore sovereign wealth fund that has already chalked up massive paper losses from its exposure to the world’s ailing banks.
  
  Temasek looks likely to have lost its entire S$400m (US$270m) investment in ABC Learning Centres, the recently-collapsed Australian childcare provider, and there are growing concerns that the fund may have to help bail out the Marina Bay Sands casino project in Singapore as owner Las Vegas Sands creaks under a mountain of debt.
  
  If last year, when Temasek built multi-billion dollar stakes in the once mighty Merrill Lynch and the UK banks Barclays and Standard Chartered, was a bad time to be putting money into the financial services sector, then now is not exactly the ideal moment to be pushed into a big investment in Singapore’s nascent casino industry.
  
  Like other investors enticed by the dramatic gains on offer in a late-stage bull market, Temasek - which is run by Ho Ching, the wife of Prime Minister Lee Hsien Loong - appears to have had the canny knack of buying right at the top of the market and then watching its investments slide in value. Even as the first warning signs of serious problems in the banking sector appeared in the first half of last year, Temasek continued to pump money into the financial services industry, which now accounts for 40 percent of its S$185 billion (US$124 billion) portfolio.
  
  This fondness for the financial services sector may stem in part from Temasek management’s closeness to the bulge-bracket investment banks. Despite the humbling of the one-time masters of the universe over the last year, Temasek has continued to recruit senior executives from Wall Street, bringing in Morgan Stanley investment banker Michael Dee in August and Rohit Sipahimalani, another Morgan Stanley banker, last month.
  
  But the rapid demise of ABC Learning, which is Australia’s largest childcare provider, shows that Temasek’s poor investment decisions are not limited to the banking sector. Temasek bought into ABC in May last year at a punchy A$7.30 a share and the stock soon headed south as the outlook for the over-hyped operator deteriorated. The shares were suspended at 54 cents each in August but equity investors are likely to lose everything after ABC went into administration because of mounting financial problems.
  
  If Temasek were to bail out Marina Bay Sands, it certainly would not be buying at the top of the market. But it would be an investment decision driven less by financial prudence and more by the need for the Singaporean government to ensure that its casino experiment doesn’t fail.
  
  Nervous about the Singapore economy’s narrow reliance on shipping and financial services, the socially-conservative government took the controversial step of legalizing casinos in 2005, prompting an unprecedented public debate in the usually acquiescent city state.
  
  Having staked its reputation on partnerships with the likes of Las Vegas Sands and Malaysia’s Genting (which won the licenses to operate the two casino resorts), the government is desperate not to let the experiment fail. So Las Vegas Sands’ indication last week that it will not be able to meet the requirements of some of its loans unless it cuts spending will have sent shockwaves running through the corridors of power in Singapore.
  
  While Sheldon Adelson, the tycoon behind Las Vegas Sands, has personally confirmed his commitment to completing the Marina Bay Sands resort, analysts now believe it is increasingly likely that the government may have to step in at some stage, probably in the guise of Temasek or one of its linked companies. Adelson’s gaming empire is such bad shape that Sands has had to stop construction in Macau of its huge Cotai Strip development opposite its Venetian complex which is intended to house various 5-star hotels as well as a casino. The Macau government has said -- according to the Financial Times- that it won’t allow any casinos to close and will take them over if necessary. However it seems that commitment does not extend to helping out partly finished projects.
  “If Las Vegas Sands cannot cough up its share of equity, the Singapore government is likely to step in,” said Donald Chua, an analyst at local stock broking firm CIMB-GK, in a research note. “A viable option would be a 49:51 joint venture between the Government and CapitaLand, with CapitaLand taking a controlling stake.”
  
  Singapore-based brokerage UOB Kay Hian added that the syndicate of banks providing the S$5.4bn ($3.6bn) debt facility for the construction of Marina Bay Sands could seek a new investor, hinting that they could turn to 40pc-Temasek-owned CapitaLand, a property group that was involved in unsuccessful bids for both casino licenses.
  
  CapitaLand has insisted that it has not held any talks with Las Vegas Sands but, at the same time, it said that it was “strategically watching the situation and studying opportunities related to distressed companies or assets.” And, despite Las Vegas Sands’ assurances, the Singapore Tourist Board stressed this week that it has a number of options should the project fail, including taking possession of the development site.
  
  While Temasek or CapitaLand may be able to pick up a stake in the Marina Bay casino on the cheap, gambling is one strategic industry that the government did not want end up owning. The government originally opted for international gaming companies like Las Vegas Sands and Genting because it thought they had the experience and clout to build world-class casino resorts that would attract gamblers from around the globe. While the Marina Bay Sands is unlikely to be re-branded as the Temasek Casino, whatever happens, gaming analysts doubt whether a government-backed resort would have the same draw.
  
  With the impact of the financial crisis only just starting to hit the global economy, there are likely to be more disappointments ahead for Temasek in the coming months. But Temasek is not required to disclose regular financial results, as it has been given the status of an exempt private company despite being owned by the Ministry of Finance. So the people of Singapore, whose money Temasek is ultimately controlling, will probably have to wait until summer, when the fund is expected to release its next annual review, to find out exactly how badly it has fared over the past year.
  
  Temasek also leaped heavily into one of China's highest profile, and perhaps more vulnerable, property developers, Country Garden. When it went public in Hong Kong in April 2007, Country Garden was the second largest IPO in Hong Kong history, with Temasek joining local tycoons Lee Shau Kee and Robert Kuok as key investors. According to the mainland financial magazine Caijing, a subsequent S$800 million convertible bond issue in Singapore in February this year was made on terms which suggest the company is very stretched and badly needs to keep its share price from falling. It is now little more than half its initial price and down 75 percent from its peak.
  
  Australia, once seen as a safe if unexciting location for Singapore cash, has also attracted top of the market deals from Singapore Power. Already well-established in Australia, it paid heavily in cash for the eastern Australia assets of pipeline company Alinta but with values in decline they have been unable now to flip them into their 51 percent owned local subsidiary SP Ausnet leaving SP meanwhile saddled with huge borrowings.

And on one of Singapore's popular forums, ChannelNewsAsia, this issue is fast getting massive attention: here