Temasek’s us$10 billion dollar bets carry unnecessary, huge risks

[makapaaa]

[h=1]TEMASEK’S US$10 BILLION DOLLAR BETS CARRY UNNECESSARY, HUGE RISKS[/h]
Post date:
7 Feb 2015 - 6:12pm








Temasek should improve its transparency and publish ALL information on its investments similar toNorway’s Government Pension Fund Global. When a fund 5 times the size of Temasek is able to publish its entire holding of more than 8,000 equities, why does Temasek only disclose its 42 major investments in 2013 and 46 in 2014?
Moreover, Temasek’s investments have already been compiled by financial data vendors and are available online. Citizens are the owners of our reserves and it is our right to have access to such information. A listed securities portfolio of 74 investments in 2013 is enclosed at the bottom of this post.
The top ten listed investments in market value made up 50% of Temasek’s total assets. Unlike other funds where risk is diversified, Temasek seems to be trying to put as many eggs into one basket as possible with an 18% stake in Standard Chartered PLC and 7% in China Construction Bank, more than S$30 billion invested in 2 foreign banks.
(Market value in US$ million)

.	Security	Shares	%	Market value	Country	Sector	Ticker
1	SINGAPORE TELECOM LTD	8,283,957,568	51.96	26430	SINGAPORE	Telecom	ST SP
2	CHINA CONSTRUCTION BANK-H	17,878,670,050	7.44	14920	CHINA	Financials	939 HK
3	STANDARD CHARTERED PLC	432,746,145	17.88	10450	BRITAIN	Financials	STAN LN
4	DBS GROUP HOLDINGS LTD	713,033,749	29.22	9910	SINGAPORE	Financials	DBS SP
5	SINGAPORE AIRLINES LTD	657,800,748	56.11	6000	SINGAPORE	Industrials	SIA SP
6	SINGAPORE TECH ENGINEERING	1,559,393,443	50.26	5460	SINGAPORE	Industrials	STE SP
7	CAPITALAND LTD	1,680,704,140	39.48	5080	SINGAPORE	Financials	CAPL SP
8	SHIN CORP PCL	1,334,354,825	41.62	3950	THAILAND	Telecom	INTUCH TB
9	SEMBCORP INDUSTRIES LTD	883,919,088	49.47	3540	SINGAPORE	Industrials	SCI SP
10	KEPPEL CORP LTD	377,344,425	20.89	3290	SINGAPORE	Industrials	KEP SP
.	.	.	Total	US$89 bil

Both investments will have no room for error because their potential losses will dwarf losses of smaller investments.
Has Temasek not learnt any lesson from its US$4.6 billion loss in its Merrill Lynch investment andUS$1.5 billion (80%) loss in Barclays Bank?

By placing bets of more than US$10 billion on any investment, Temasek has taken risks on behalf of Singaporeans, risks which we would not have assumed. If Temasek’s own costly mistakes are insufficient, it should learn from GIC’s S$14 billion UBS bet in 2007 which is still 40%* underwater after 7 years. (*inclusive of 18% interest payment, dividends and recent forex gains)
Should both banks fail spectacularly, will Lee Kuan Yew step in and tell us that Temasek intends to “keep for the next two to three decades and grow with them”?
Standard Chartered investment has been in Temasek’s stable for almost a decade, currently sitting on paper losses of at least 30% without any turnaround in sight. Was this part of Temasek’s investment strategy?

Standard Chartered’s entire profits last year may have been wiped out by the collapse in commodity prices and there appears to be another rights issue on the horizon.
Although dividend payments could have made up for most of the capital loss, including rights issue, forex loss could still amount to some 25% after almost a decade.

Should Temasek decide to divest Standard Chartered at current prices, the net loss would be at least S$3 billion. It will take numerous $10 million/$100 million investments to make up for a single huge loss. By taking up such a huge stake, all exits have now been shut and it will take a miracle to dispose of Standard Chartered at a profit.
In 2011, Temasek had indicated it wanted to trim its Standard Chartered stake when it raisedS$650 million from the sale of zero coupon exchangeable bonds maturing in 2014. Since the bonds were fully redeemed in 2014, Temasek had missed the only opportunity to reduce its holding when the price was more favourable.
Should Temasek realise billion-dollar losses, there will also be political backlash and Temasek appears to be aware of this. Despite stock market making new highs, Standard Chartered shares have gone in the opposite direction. What happens when global stock market tanks?
Temasek’s major investments in China’s financial sector appear to be more profitable but an analysis would be required to confirm this.
China’s double-digit growth during most of the last 2 decades are over. China’s growth story has been based on the expansion of credit – some US$15 trillion after the last financial crisis with a significant amount for financing infrastructure and real estate which includes ghost cities generating zero return. Investments at the tail end of China’s phenomenal ‘growth’ carry significant risks.
Video of China’s ghost cities
In April 2014, a Forbes article reported that Li Ka Shing and his family had been “on a selling spree in Mainland China since last August (2013)”. Li was way ahead of most foreign investors when it came to investing in China whereas Temasek has only recently committed tens of billion$ of our reserves.
Excluding GLCs transferred to Temasek, Temasek does not appear to be investing but speculating andgoing for the kill with its $10 billion investments.
Temasek seems to be in a hurry to make as much money as possible with humongous bets which are extremely risky. As a significant shareholder in many foreign companies, Temasek is unable to divest during times of great volatility. Temasek should diversify and not make US$10 billion dollar bets which carry unnecessary risks.
**
I have been trying to verify Temasek’s ridiculously high TSR and no luck so far. What I do is Google ‘Temasek’ and ‘name of investment’ and pieces of interesting information will show up on the screen. Frequently, data may not be complete and this is the result of Temasek’s conscious effort not to allow the public to scrutinise its performance. Should others be able to confirm Temasek’s 16% 40-year TSR, please share the information.
2013 May – Temasek listed securities portfolio.

.	NAME	MKT VAL	TICKER
1	SINGAPORE TELECOM LTD	26430	ST SP
2	CHINA CONSTRUCTION BANK-H	14920	939 HK
3	STANDARD CHARTERED PLC	10450	STAN LN
4	DBS GROUP HOLDINGS LTD	9910	DBS SP
5	SINGAPORE AIRLINES LTD	6000	SIA SP
6	SINGAPORE TECH ENGINEERING	5460	STE SP
7	CAPITALAND LTD	5080	CAPL SP
8	SHIN CORP PCL	3950	INTUCH TB
9	SEMBCORP INDUSTRIES LTD	3540	SCI SP
10	KEPPEL CORP LTD	3290	KEP SP
11	IND & COMM BK OF CHINA-H	3270	1398 HK
12	SP AUSNET	2190	SPN AU
13	REPSOL SA	1920	REP SM
14	NEPTUNE ORIENT LINES LTD	1530	NOL SP
15	BANK OF CHINA LTD-H	1520	3988 HK
16	LEVEL 3 COMMUNICATIONS INC	1310	LVLT US
17	SATS LTD	1230	SATS SP
18	MOSAIC CO/THE	1190	MOS US
19	MAPLETREE LOGISTICS TRUST	1060	MLT SP
20	MAPLETREE COMMERCIAL TRUST	970	MCT SP
21	SMRT CORP LTD	951	MRT SP
22	EVONIK INDUSTRIES AG	853	EVK GR
23	OLAM INTERNATIONAL LTD	832	OLAM SP
24	HUTCHISON PORT HOLDINGS TR-	780	HPHT SP
25	MAPLETREE INDUSTRIAL TRUST	625	MINT SP
26	STATS CHIPPAC LTD	619	STAT SP
27	QUINTILES TRANSNATIONAL HOLD	376	Q US
28	MEG ENERGY CORP	295	MEG CN
29	NEW CHINA LIFE INSURANCE C-H	286	1336 HK
30	CHENIERE ENERGY INC	277	LNG US
31	TURQUOISE HILL RESOURCES LTD	266	TRQ US
32	SHANGHAI PHARMACEUTICALS-H	246	2607 HK
33	CITYSPRING INFRASTRUCTURE TR	224	CITY SP
34	CITIC SECURITIES CO LTD-H	192	6030 HK
35	CITIC RESOURCES HOLDINGS LTD	119	1205 HK
36	AIR PRODUCTS & CHEMICALS INC	115	APD US
37	FACEBOOK INC-A	114	FB US
38	KEPPEL REIT	92	KREIT SP
39	BAIDU INC – SPON ADR	90	BIDU US
40	LAI FUNG HOLDINGS LTD	82	1125 HK
41	ZOOMLION HEAVY INDUSTRY – H	75	1157 HK
42	COSCO CORP SINGAPORE LTD	71	COS SP
43	EXPEDITORS INTL WASH INC	66	EXPD US
44	PETROLEO BRASILEIRO-SPON ADR	63	PBR/A US
45	MONSANTO CO	60	MON US
46	HUANENG RENEWABLES CORP-H	52	958 HK
47	NEWOCEAN ENERGY HLDGS LTD	46	342 HK
48	SAM ENGINEERING & EQUIPMENT	39	SEQB MK
49	COACH INC	35	COH US
50	AMYRIS INC	33	AMRS US
51	TIGER AIRWAYS HOLDINGS LTD	32	TGR SP
53	POTASH CORP OF SASKATCHEWAN	31	POT US
52	ASCOTT RESIDENCE TRUST	31	ART SP
55	ASIAN CITRUS HOLDINGS LTD	26	ACHL LN
54	MARIN SOFTWARE INC	26	MRIN US
56	CAPITACOMMERCIAL TRUST	19	CCT SP
57	CLEAN ENERGY FUELS CORP	18	CLNE US
58	SEADRILL LTD	16	SDRL US
59	APPLE INC	16	AAPL US
60	YY INC-ADR	14	YY US
61	PEABODY ENERGY CORP	13	BTU US
63	AMTEK ENGINEERING LTD	10	AMTK SP
62	CHENIERE ENERGY PARTNERS LP	10	CQP US
64	CF INDUSTRIES HOLDINGS INC	8	CF US
65	AGRIUM INC	7	AGU CN
66	ISOFTSTONE HOLDINGS LTD-ADS	6	ISS US
67	SHOUGANG CONCORD TECH HLD	6	521 HK
68	DYNA-MAC HOLDINGS LTD	6	DMHL SP
69	MELCO CROWN ENTERTAINME-ADR	5	MPEL US
70	CEI CONTRACT MANUFACTURING	5	CEI SP
71	INTREPID POTASH INC	5	IPI US
72	SEMBCORP MARINE LTD	4	SMM SP
73	SINGAPORE POST LTD	0.7	SPOST SP
74	M DREAM INWORLD LTD	0.08	8100 HK
.	TOTAL MARKET VALUE	US$113.5 bil

2012 Sep

.	NAME	MKT VAL	TICKER
1	SINGAPORE TELECOM LTD	23660	ST SP
2	CHINA CONSTRUCTION BANK-H	12220	939 HK
3	STANDARD CHARTERED PLC	10400	STAN LN
4	DBS GROUP HOLDINGS LTD	8400	DBS SP
5	SINGAPORE AIRLINES LTD	5790	SIA SP
6	SINGAPORE TECH ENGINEERING	4430	STE SP
7	CAPITALAND LTD	4410	CAPL SP
8	SEMBCORP INDUSTRIES LTD	4090	SCI SP
9	KEPPEL CORP LTD	3540	KEP SP
10	SHIN CORP PCL	2980	INTUCH TB
11	IND & COMM BK OF CHINA-H	2620	1398 HK
12	SP AUSNET	1800	SPN AU
13	NEPTUNE ORIENT LINES LTD	1630	NOL SP
14	BANK OF CHINA LTD-H	1170	3988 HK
15	MOSAIC CO/THE	1160	MOS US
16	SMRT CORP LTD	1120	MRT SP
17	SATS LTD	1040	SATS SP
18	MAPLETREE LOGISTICS TRUST	918	MLT SP
19	HUTCHISON PORT HOLDINGS TR-U	766	HPHT SP
20	MAPLETREE COMMERCIAL TRUST	742	MCT SP
21	OLAM INTERNATIONAL LTD	663	OLAM SP
22	MAPLETREE INDUSTRIAL TRUST	556	MINT SP
23	STATS CHIPPAC LTD	535	STAT SP
24	MEG ENERGY CORP	461	MEG CN
25	INMET MINING CORPORATION	394	IMN CN
26	CHENIERE ENERGY INC	258	LNG US
27	NEW CHINA LIFE INSURANCE C-H	229	1336 HK
28	SHANGHAI PHARMACEUTICALS-H	219	2607 HK
29	TIGER AIRWAYS HOLDINGS LTD	204	TGR SP
30	CITYSPRING INFRASTRUCTURE TR	201	CITY SP
31	CITIC SECURITIES CO LTD-H	156	6030 HK
32	SHANGRI-LA HOTELS (MAL) BHD	140	SHMB MK
33	CITIC RESOURCES HOLDINGS LTD	126	1205 HK
34	BLACKROCK INC	114	BLK US
35	COSCO CORP SINGAPORE LTD	91	COS SP
36	BAIDU INC – SPON ADR	78	BIDU US
37	PETROLEO BRASILEIRO-SPON ADR	75	PBR/A US
38	LAI FUNG HOLDINGS LTD	58	1125 HK
39	TURQUOISE HILL RESOURCES LTD	50	TRQ CN
40	SAM ENGINEERING & EQUIPMENT	48	SEQB MK
41	ASIAN CITRUS HOLDINGS LTD	32	ACHL LN
42	ISHARES S&P 500 INDEX FUND	27	IVV US
43	SPDR S&P 500 ETF TRUST	26	SPY US
44	CLEAN ENERGY FUELS CORP	23	CLNE US
45	HUANENG RENEWABLES CORP-H	20	958 HK
46	AMYRIS INC	19	AMRS US
47	SEMBCORP MARINE LTD	18	SMM SP
48	MELCO CROWN ENTERTAINME-ADR	17	MPEL US
49	PEABODY ENERGY CORP	16	BTU US
50	CAPITACOMMERCIAL TRUST	16	CCT SP
51	SEADRILL LTD	15	SDRL NO
53	ISOFTSTONE HOLDINGS LTD-ADS	8	ISS US
52	MINDRAY MEDICAL INTL LTD-ADR	8	MR US
55	ABERCROMBIE & FITCH CO-CL A	6	ANF US
54	SHOUGANG CONCORD TECH HLD	6	521 HK
56	CEI CONTRACT MANUFACTURING	5	CEI SP
57	AMERICAN INTERNATIONAL GROU	4	AIG US
58	MONSANTO CO	4	MON US
59	SUNNINGDALE TECH LTD	4	SUNN SP
60	SICHUAN MEIFENG CHEM INDUS-A	3	000731 CH
61	KOSMOS ENERGY LTD	2	KOS US
63	DYNA-MAC HOLDINGS LTD	2	DMHL SP
62	POTASH CORP OF SASKATCHEWAN	1	POT CN
64	SINGAPORE POST LTD	0.58	SPOST SP
65	NQ MOBILE INC – ADR	0.27	NQ US
66	M DREAM INWORLD LTD	0.06	8100 HK
.	TOTAL MARKET VALUE	97824.91

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Phillip Ang
*The writer blogs at https://likedatosocanmeh.wordpress.com/

 

[borom]

This is one reason why we MUST have a strong opposition in Parliament ,not let ANY party hold more than 2/3 of the seats and not allow a PM to serve more than 2 terms.

Silliporeans are now paying the price -the CPF minimum sum being one of the painful ones-interlinked with the high cost of public housing.

 

[krafty]

mixed thoughts on temasek, they are moderately high risk investment firm and they pay high coupon. on the other hand they may pay high and not let you take out your principle. also, when they pay high yield also mean that they borrow expensively(in this case, i think they dun need as they have our cpf fund to dig in readily). lehman bros is junk bond, pay low coupon and went bust...so in the end, s&p is merely a rating agency that need overhaul of their criteria for rating. 2 cents worth, let me know if you think otherwise.