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Temasek: Confused

In Temasek on 13/07/2011 at 6:31 am

One of the criticisms that has been made of Temasek is that it does not publicly show the breakdown in performance between its legacy assets (acquired before 31 March 2002) and its post-March 2002 assts when it became a very active investor.  Because Ho Ching became CEO in 2002, this would also show how well Temasek did with her in charge.  Waz her performance like? Do the Merrill Lynchs, Barclays, Shins and ABCs outweigh the StanCharts and Chinese banks; or vice versa?

Well we now have an idea. In its latest annual report, Temasek said, “Investments made since 2002, when we stepped up our exposure in Asia, delivered annualised returns of almost 21% to Temasek”, while investments made before March 2002 delivered annualised returns of 11% over the last nine years.

It also showed that of the S$193bn in portfolio assets as at 31 March 2011, S$100m were post March 2002, while only US$93m were legacy assets. http://www.temasekreview.com.sg/investments/inv_framework.html

And in a presentation slide, it said that S$100 in these new assets in 2002 would be worth S$550 today while S$100 in legacy assets would be worth S$270.

(All these also appeared in newspaper ads.)

The numbers look gd.

Problem is that I have conceptual issues linking  this information with the information given on other pages of the report (which indicate, as ST reported, that its recent performance is OK but nothing great), and the presentation. I also have questions on the definitions of certain terms used and the methodolgy used. As I doubt Temasek would entertain questions from me, I will remain confused.

Another problem I have is that our constructive, nation building MSM did not declare Ho Ching an investment genius. On the face of it, 21% annualised returns over nine years  is to be praised, not kept quiet about. At a time when her hubby is having to deal with the anger of many voters over govmin policies and the incompetent arrogance within the PAP, surely playing up the role of Ho Ching is sumething our media should be doing. At least he has an investment genius as his Mrs.

Reminds me of the Sherlock Holmes mystery that he solved by asking the question, “Why didn’t the dog bark?” Why I don’t know.

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  1. “Investments made since 2002, when we stepped up our exposure in Asia, delivered annualised returns of almost 21% to Temasek”, while investments made before March 2002 delivered annualised returns of 11% over the last nine years.

    This means that when you minus the 2.5%~4% interest they pay for CPF savings, the difference is what they are pocketting at the expense of CPF contributors. And exactly because the funds profitted from such a cheap source of funds, the Ministers can afford to pay them themselves obscene salaries which they claim they deserves.

    Now from this perspective, you tell me whether our Singapore leaders are more competent than their Malaysian counterparts which they claimed are more incompetent ?

  2. Well, we can segregate the performance according to BC/AD – Before Ching & After Dhanabalan,

    The outlier and the one investment that gave the bulk of the return in the period Before Christ, oops, Before Ching was SingTel. If you strip out SingTel from the portfolio, Temasek’s long-term return will look pathetic.

  3. If you have questions about the report, why don’t you share them with us here?

    Maybe together we can answer them or challenge Temasek to do so.

    Would be better than insinuating that there’s something suspicious but not giving any details as to what.

    • Not practical as most of my questions, queries are very technical. If I blog it, I have to explain in great detail or dumb down. Not productive either way.

      More productive to talk to my friends who share my interest and who are smarter than me in financial analysis.

      You think Temasek would bother to reply.

  4. Ptu is a Temasek or their cronies. He’s bother-ing to reply.

  5. Thats because you are looking at the wrong line item.

    One should never look at Total Assets but Net Asset Value (NAV), especially when most of the asset growth has been debt-funded by ultra-cheap financing with little or no restrictive covenants via our CPF.

    I have read Temasek’s published annual report before. It is a selective presentation – it tells you what they want to tell you.

  6. I wonder how much of Temasek’s stellar performance was due to the continual privatization and listing of former state owned, majority-owned companies rather than due to brilliant investment strategies and decisions.

    Once you factor that in, I suspect that Ho Ching’s tenure will not reflect well on Temasek Holdings.

    • Agree completely. Post Singtel, the sale of other legacy assets ( i.e. those already in the portfolio pre HC’s tenure ) e.g the power companies, F&N, Singapore Food Industries etc would have produced substantial capital returns. Absent these, what would have been the returns? Actually, the timing of the sale of these legacy assets is also questionable ( to shore up P/L and also to replenish cash for averaging down past investments gone sour and new big bets ?)

      For a true evaluation of the performance attributable to HC’s team, only the new investment assets purchased and subsequent divestment of same plus appreciation over acquisition cost at accounting date should be included. But I guess this will never be revealed. Nor will a valued added computation per payroll dollar be provided. Sigh….

  7. If Temasek’s portfolio contains many former state monopolies, the high return is to be expected. The monopolies have tremendous pricing power and the government is more than happy to ensure their high profits at the expense of its citizens.

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