Singapore Prime Minister Lee Hsien Loong’s wife Ho Ching is leaving Temasek Holdings poorer than it was three years ago.
The Singapore sovereign wealth lost $39 billion or 31 percent of its value in just eight months. It shrank from 185 billion Singapore dollars to 127 billion Singapore dollars ($85 billion) between March and November last year, said the Singapore Finance Ministry yesterday.
But that’s not the full story.
Temasek Holdings was worth more before it bought stakes in big Western banks such as Merrill Lynch and Barclays.
Ms Ho, who will be stepping down after five years as CEO in October, transformed Temasek into one of the world’s largest sovereign wealth funds, with stakes in Britain, America, India China, Australia and Southeast Asia.
But the steady gains Temasek was making under her leadership, racking up a record 18 billion Singapore dollars in profits in the financial year ended March 2008, have been wiped out by the global downturn.
Temasek was worth more three years ago. In the financial year ended March 2006, it reported its portfolio amounted to 129 billion Singapore dollars.
That was before it invested in Merrill Lynch and Barclays in 2007. Reuters reports:
- Temasek’s $5 billion plus investment in Merrill Lynch has resulted in a loss of more than $2 billion.
- British bank Barclays’ share price has sunk to a little over one pound from more than seven pounds when Temasek bought its shares 18 months ago.
- Thai telecoms firm Shin Corp has lost about two-thirds of its market value since a $3.8 billion Temasek-led investment in it in 2006.
But there have been proud moments too. In August 2007, the fund reported: “Temasek portfolio crosses US$100 billion mark.”
Temasek has become more forthcoming in reporting its stakes, profits and earnings than other sovereign wealth funds. That may be because it issued bonds, but Ms Ho deserves credit for the openness she brought.
The GIC mystery
Compared with Temasek, the larger Government of Singapore Investment Corporation (GIC) is a riddle wrapped in a mystery inside an enigma.
Who knows what shape GIC is in after pumping billions of dollars into Citigroup and UBS, which are drowning in a sea of red ink?
The government didn’t reveal GIC’s losses yesterday. A minister merely said GIC’s investments had “'fallen by much less than the decline in global equity markets indices of 42 percent for 2008.”
That was hardly reassuring because GIC has so much more to lose.
GIC is believed to manage more than $300 billion. So even if it lost 10 percent, that’s $30 billion. But that’s not what the minister said. She merely said it had lost “much less than… 42 percent”. Forty-two percent of $300 billion is $126 billion. How much is much less than $126 billion?
