Government of Singapore Investment Corporation (GIC) deputy chairman Tony Tan got the George Soros/Warren Buffet treatment from the international media yesterday. He was quoted everywhere from the BBC to CNN for his dire forecast. `We could be facing a recession which is longer, deeper and wider than any recession that we have encountered in the last 30 years,'' he said.
Oh yes, we are already in the midst of an oil crisis, and there's still President Carter, trouble in the Middle East, resentment in China and Russia. All we need to complete a Seventies Redux are the hairdos and bellbottoms.
Jokes aside, Dr Tan is eminently qualified to sound the alarm because of his position in one of the world's largest sovereign wealth funds. Which unfortunately has been taking a bath. As Dow Jones recalls:
GIC recently invested $6.9 billion in Citigroup and in December invested 11 billion Swiss francs — now equivalent to about $11 billion — in UBS AG after the banks booked large losses on their subprime-mortgage exposure.
AFP adds:
Citigroup, the US bank hardest hit by the subprime troubles, on Friday reported a 5.1 billion dollar net loss during the first quarter.
Earlier this month UBS revealed an additional 19 billion US dollars in writedowns, making the Swiss-based bank the worst-hit by the subprime crisis.
UBS said it was seeking to raise 15 billion Swiss francs through a rights issue, and some analysts said they would not be surprised if GIC provided another capital infusion for UBS.
Dr Tan believes the investments will pay off in the long run. But he conceded: "The next few years may well be among the most challenging years for GIC since our establishment in 1981."
Just how much does GIC and little brother Temasek Holdings have at stake? Reuters says:
- Morgan Stanley said in February GIC was the world's third-largest sovereign wealth fund with $330 billion in assets under management, behind the Abu Dhabi Investment Authority with $875 billion and Norway's Government Pension Fund with $380 billion.
- GIC is one of the 10 biggest property investors in the world, and owns Merrill Lynch's London office and Westin Paris. Its other holdings range from those in Indian financial firms such as ICICI Bank to Budapest airport.
- According to Morgan Stanley, Temasek manages $159.2 billion and is the world's seventh-largest sovereign wealth fund.
- Temasek has a 28 percent stake in Southeast Asia's largest lender DBS Group, a 19 percent stake in Standard Chartered Bank and a 2.1 percent stake in Barclays.
- Temasek last month raised $3 billion by selling Singapore electricity firm Tuas Power to China's Huaneng and it offloaded its 42 percent stake in Indonesia's sixth-biggest lender Bank Internasional Indonesia BNII.JK to Malayan Banking Bhd for $1.1 billion.
There's more. See the Reuters factbox.
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