I wonder what Singapore will say to this. Ostensibly the
story is about China. “China takes the bank”, says the Economist in a story
about the state-owned China Development Bank buying a stake in the British
Barclays bank. But Singapore’s government-owned Temasek Holdings also bought
Barclays shares at the same time, as the Economist duly notes.
And, very
politely, it says "little is known" about these "state-run investment pools".
That seems surprising to me in Singapore. But that’s what the Economist says.The
Barclays deal "marks a new adventurousness on the part of China’s
government,” it says and adds:
Although CDB is a state-owned bank,
most governments buy their foreign assets through state-run investment pools,
known as sovereign-wealth funds. These funds are getting bigger and bolder.
They have some $1.5-2.5 trillion to play with, according to America’s Treasury,
a sum expected to grow fast… Yet little is known about these funds…The Chinese fund is likely to be
modelled on Singapore’s two funds, GIC and Temasek. These entities are used to
taking big stakes in companies. The Singaporean funds also try to import
expertise through their investments—hence a focus on telecoms and banking. It
would be surprising if China’s fund did not make investment decisions for
similar reasons.
And here comes the rub:
(The) funds’ lack of transparency is worth
worrying about. If one made a bad bet and had to unwind it fast, nobody would
know what was happening. No one knows how they manage risk. And although funds
have tried hard to avoid buying assets that might attract the attention of
politicians and voters, nobody knows how politically motivated they might
become.
Here the Economist is referring to not
only the Chinese or Singaporean funds but also those of oil-exporting nations. “Kazakhstan,
Azerbaijan, Venezuela, Bolivia, Nigeria and Angola have all either set up funds
recently or are looking at doing so,” it says.
Still, Singapore may not like the Economist’s comments. I
wonder if the government will respond with a letter to the editor.
Although not
required to disclose financial information, Temasek Holdings has been releasing
annual financial reviews since 2004. The latest, available on its website,
gives figures up to March last year. It has a stake in almost every major
Singapore company from Singapore Airlines to the local broadcaster MediaCorp.
It also has a stake
in several foreign companies including Indian blue chips like ICICI Bank, Mahindra and Mahindra and the Apollo Hospital
Group and Thai telco Shin Corp while its
subsidiary, Singapore Telecom, gets a
considerable part of its revenue from the Indian telco Bharti and the Australian telco Optus. That can raise
nationalist feelings. Former Thai prime minister Thaksin Shinawatra was deposed
in a coup after he sold Shin Corp to Temasek.
Now the Economist has expressed other concerns about
similar “state-run investment pools”. They could provide economic
stability by being long-term investors, it says, but they have to be more open.
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