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[h=2]NUS Busines School’s study praising Temasek[/h]
July 13th, 2014 |
Author: Editorial
In a study by the NUS Business School, “The
State as Shareholder: The Case of Singapore“, it praised Temasek Holdings as
well as Government-linked Companies (GLCs) and Government-linked Real Estate
Investment Trusts (GLREITs) for having sound corporate governance practices in
comparison with non-GLCs.
It also indicated that good corporate governance and a clear business mandate
have helped these government-linked entities perform better than the market in
Singapore.
“Monitoring and accountability measures are in place to ensure that Temasek
fulfils its role as a state holding company,” the report said.
It also said that that there is an “internal network formed” by directors
from the parent GLC and its subsidiaries, GLREITs. “These practices promote
information exchange within the network and encourage alignment of the corporate
strategy,” it said.
It further added, “SGX-listed GLCs and GLREITs are well managed, efficient,
and profitable. They play a vital economic role in transforming Singapore from a
developing third world country to its current status as a globalised city-state.
It can be argued that GLCs and GLREITs in Singapore are an exception to how
state-owned enterprises (SOE) around the world are owned, managed and
governed.”
The research linked several drivers of good corporate governance to the
better-than-average performance of GLCs, including:
The study found that Temasek’s 20-year total shareholder return was 2.5 times
that of the MCSI Singapore as at 2012, and that the market value of its
portfolio surged by 300% between 1994 and 2013.
While MCSI Singapore consists of stocks listed here, Temasek’s Singapore
exposure includes unlisted assets which made up 30% of its portfolio in 2013.
“Temasek does have unlisted assets and international stocks, we just had to take
the best (benchmark) available,” said a co-author of the study.
Findings also showed that between 2008 and 2013, GLCs accounted for an
average of 37% of the stock market’s value of $500 billion, while GLReits made
up 54% of the Reit market value of $35 million.
The report concluded:
The research findings show that Temasek is an active investor with long-term
returns maximisation as the key motive in its investment decision-making. It is
able to fulfil its role with limited political interference. Monitoring and
accountability measures are in place in Temasek, as disclosed by its Group
Financial Summary and Portfolio Performance.
Temasek owns GLCs and GLREITs in a multi-tier corporate structure. Since
2003, Temasek has reduced its holding on the number of SGX-listed GLCs while its
holding on SGX-listed GLREITs increased. Despite these changes in its investment
portfolio, Temasek maintains a high percentage of ownership in transportation
and communications companies.
In conclusion, our findings show that SGX-listed GLCs generally have better
corporate governance practices in comparison with non-GLCs. As articulated by
one observer, “Singapore … has been a major exception to the central tenet of
Economics 101 that government participation is bad for the
economy”.
Temasek-connected directors sit on NUS Business School Advisory
Board
Looking at the NUS Business School Advisory Board [Link],
we can find the following members sitting inside:
Mr Dhanabalan, of course, is the former chairman of Temasek Holdings while Mr
Hsieh Fu Hua, the former President of Temasek. Mr Hsieh currently sits on the
board of GIC.
Dr William Fung is the Chairman of his own Li & Fung company in Hong Kong
[Link]. On top of
that he also sits on the board of SIA. Temasek, of course, is a strategic
investor of Li & Fung (‘Li
& Fung sells stake to Temasek for HK$3.88b‘).
Mr Hsieh Tsun-Yan the Chairman of LinHart Group. He also sits on the board of
SIA.
Mr Liew Mun Leong is a familiar figure in the corporate scene. He was the
President & CEO of CapitaLand Group under Temasek.
The NUS Business School Advisory Board is supposed to provide strategic
advice and guidance to the Dean and the leadership of NUS Business School. With
so many “Temasek-connected” directors sitting on the advisory board of NUS
Business School, will the Dean be willing to publish anything negative (if any)
about Temasek Holdings?
Conversely, can we consider the above report from NUS Business School
“objective”?
In other first world countries, when, say a magazine of a publishing group is
writing matters pertaining to the publishing group itself, the magazine will put
up an advisory to disclose to readers its relationship with the publishing
group. This is to maintain transparency with the readers. No such disclosure has
been observed inside the above NUS report.
State as Shareholder: The Case of Singapore“, it praised Temasek Holdings as
well as Government-linked Companies (GLCs) and Government-linked Real Estate
Investment Trusts (GLREITs) for having sound corporate governance practices in
comparison with non-GLCs.
It also indicated that good corporate governance and a clear business mandate
have helped these government-linked entities perform better than the market in
Singapore.
“Monitoring and accountability measures are in place to ensure that Temasek
fulfils its role as a state holding company,” the report said.
It also said that that there is an “internal network formed” by directors
from the parent GLC and its subsidiaries, GLREITs. “These practices promote
information exchange within the network and encourage alignment of the corporate
strategy,” it said.
It further added, “SGX-listed GLCs and GLREITs are well managed, efficient,
and profitable. They play a vital economic role in transforming Singapore from a
developing third world country to its current status as a globalised city-state.
It can be argued that GLCs and GLREITs in Singapore are an exception to how
state-owned enterprises (SOE) around the world are owned, managed and
governed.”
The research linked several drivers of good corporate governance to the
better-than-average performance of GLCs, including:
- ability to operate with a clear business mandate and at an arm’s length from
politics - being publicly listed on the stock exchange
- internationalisation of GLCs’ businesses
- leadership continuity
- adoption of corporate governance best practices
The study found that Temasek’s 20-year total shareholder return was 2.5 times
that of the MCSI Singapore as at 2012, and that the market value of its
portfolio surged by 300% between 1994 and 2013.
While MCSI Singapore consists of stocks listed here, Temasek’s Singapore
exposure includes unlisted assets which made up 30% of its portfolio in 2013.
“Temasek does have unlisted assets and international stocks, we just had to take
the best (benchmark) available,” said a co-author of the study.
Findings also showed that between 2008 and 2013, GLCs accounted for an
average of 37% of the stock market’s value of $500 billion, while GLReits made
up 54% of the Reit market value of $35 million.
The report concluded:
The research findings show that Temasek is an active investor with long-term
returns maximisation as the key motive in its investment decision-making. It is
able to fulfil its role with limited political interference. Monitoring and
accountability measures are in place in Temasek, as disclosed by its Group
Financial Summary and Portfolio Performance.
Temasek owns GLCs and GLREITs in a multi-tier corporate structure. Since
2003, Temasek has reduced its holding on the number of SGX-listed GLCs while its
holding on SGX-listed GLREITs increased. Despite these changes in its investment
portfolio, Temasek maintains a high percentage of ownership in transportation
and communications companies.
In conclusion, our findings show that SGX-listed GLCs generally have better
corporate governance practices in comparison with non-GLCs. As articulated by
one observer, “Singapore … has been a major exception to the central tenet of
Economics 101 that government participation is bad for the
economy”.
Board
Looking at the NUS Business School Advisory Board [Link],
we can find the following members sitting inside:
- Mr S Dhanabalan, Chairman
- Mr Hsieh Fu Hua, Deputy Chairman
- Dr William Fung
- Mr Hsieh Tsun-Yan
- Mr Liew Mun Leong
Mr Dhanabalan, of course, is the former chairman of Temasek Holdings while Mr
Hsieh Fu Hua, the former President of Temasek. Mr Hsieh currently sits on the
board of GIC.
Dr William Fung is the Chairman of his own Li & Fung company in Hong Kong
[Link]. On top of
that he also sits on the board of SIA. Temasek, of course, is a strategic
investor of Li & Fung (‘Li
& Fung sells stake to Temasek for HK$3.88b‘).
Mr Hsieh Tsun-Yan the Chairman of LinHart Group. He also sits on the board of
SIA.
Mr Liew Mun Leong is a familiar figure in the corporate scene. He was the
President & CEO of CapitaLand Group under Temasek.
The NUS Business School Advisory Board is supposed to provide strategic
advice and guidance to the Dean and the leadership of NUS Business School. With
so many “Temasek-connected” directors sitting on the advisory board of NUS
Business School, will the Dean be willing to publish anything negative (if any)
about Temasek Holdings?
Conversely, can we consider the above report from NUS Business School
“objective”?
In other first world countries, when, say a magazine of a publishing group is
writing matters pertaining to the publishing group itself, the magazine will put
up an advisory to disclose to readers its relationship with the publishing
group. This is to maintain transparency with the readers. No such disclosure has
been observed inside the above NUS report.
