Philip Ang: Provide breakdown of Temasek’s $43B portfolio increase!

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An honorable member of the Coffee Shop Has Just Posted the Following:

http://www.tremeritus.com/2015/08/31...olio-increase/

Provide breakdown of Temasek’s $43B portfolio increase!


August 31st, 2015 |
Author: Contributions



PAP government should provide breakdown of Temasek’s $43 billion
increase in portfolio value

PAP should be upfront with Singaporeans on the management of public funds by
Temasek Holdings. Our reserves belong to ALL Singaporeans, not PAP.

Temasek should not simply claim its portfolio value has increased by
$43 billion without providing any breakdown.

According to Temasek Review 2015, there are many multi billion dollar
investments in China which contributed significantly to the increase in
portfolio value, such as those in the table below.

Investments in HK$
Market Cap (HK$ millions)

Name% holdingMar-14Mar-15Inc/Dec% IncInc HK$ (mil)Inc S$ (mil)AIA Group4443219587843144624335784Bank of China19201601529031608871666089China Const Bank6*135334216214682681262016087China Pacific Insurance2200800368914168114843362ICB of China2155288621350115821253711642Ping An Insurance24255328769864514361069028.....Total519929202

*BT report CCB stakes as 6%, Temasek Review 5% as at 31 March 2015

2 Concentrated positions in Chinese companies exposes Temasek to
significant risks and it seems to have not learnt any lesson from GIC’s
stake in UBS. The Chinese stock market bubble had increased Temasek returns
significantly and any reversal of fortunes could also wipe out all the gains,
probably more.

On July 8, the Chinese government suddenly banned investors with stakes of more than 5% from selling for
6-months. Temasek’s 6% stake in China Construction Bank shares worth
about S$17 billion on July 9 has lost about 30% of its value in less than 2
months.

How to create a stock market bubble


Image credit: Bloomberg


The meltdown has already started and if, say, the Shanghai Index collapses
back to 2000 level, Temasek will be at least $10 billion ‘poorer’ in FY
2016.

4
By taking concentrated positions, Temasek will be unable to dispose of its
assets due to liquidity issue in a financial crisis.

5 Although it has been widely acknowledged that all assets are overinflated
due to historically low interest rates, Temasek made a net investment of
$11 billion and $14 billion in FY 2015 and FY 2014 respectively. Two
years before the GFC, Temasek had also made net investments totaling $26
billion. Will history repeat itself?

6
In March 2014, Josephine Teo, SMOS for Finance, informed Parliament that “GIC, Temasek won’t take more risks to help fund govt
spending”. Could Josephine explain why Temasek’s net investments were
increasing during the last 2 years as global stock markets headed into the
stratosphere?

7
On the domestic front, the PAP government has also been assisting Temasek to
create value out of thin air with our reserves, money which does not belong to
PAP.


Lo and behold .. Olam shares obeyed and quickly rose to overshoot $2.23.

Olam
was a loser as is reflected by its share price since 4 years ago. If not for
Temasek’s offer to take Olam private, its value would been decimated, joining
the ranks of Noble and Golden Agr.


Image source: Vecto.rs


Temasek’s view is not shared by other investors and Olam has continued moving
south; it looks set to break below its pre-offer price of about $1.50.

Temasek owns 1.425 billion Olam shares. If Temasek invested at an average
price of $2, it would have spent almost $3 billion of our
reserves since 2008.

After 7 years, Olam dividends have amounted to a miserable 31 cents per share, hardly anything to shout about.

8 Similarly, SMRT was about to break the psychological $1.00 support despite
an initial 1.1 billion tax dollars to fund the BSEP. It was only speculation
that an additional $1 billion, or more, to take over SMRT’s rail assets by the
government that prevented SMRT’s fall below $1. SMRT’s value had shot up 60% as
a result of its proposal to sell rail assets to the government.


Image source: FT.com


9 If not for government intervention, Temasek’s net portfolio would not have
increased by $43 billion. The manner in which Temasek uses our reserves to
support its investments, singlehandedly increasing its value, is a cause for
concern.

Singaporeans should not be expected to trust the government blindly on
investments involving hundreds of billions of our reserves. Why
should PAP fear disclosing the breakdown of the $43 billion increase in
Temasek’s net portfolio value?

PAP should come clean and start to earn the trust of citizens instead of
hiding behind legislations to prevent
disclosure.

Phillip
Ang

* Phillip blogs at likedatosocanmeh.


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