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Archive for the ‘Temasek’ Category

PM talks cock about “private” sector

In China, Temasek on 14/09/2014 at 6:57 am

The private sector-led, Government backed Guangzhou Knowledge City (GKC)* is a good model for future Singapore-China projects, said Prime Minister Lee Hsien Loong on Friday (Sep 12).

… Mr Lee said he was happy with the progress, six years after he first discussed the project with provincial leaders … the private sector-led GKC is a different model that Singapore is “trying out” after the Suzhou Industrial Park and Tianjin Eco-city, both government-to-government projects. (CNA on Friday)

Funnily the private sector leadership is provided by Temasek-owned company Singbridge who is in a j/v and the southern Chinese city of Guangzhou.  Singbridge is 100% owned by Temasek, 100% owned by the Minister for Finance. Not even the fig-leaf of a SGX-listed TLC like Keppel or SIA.

And PM went to Catholic High and NJC? But then Yaacon was from RI (see tom)

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*”The hurdle for government-to-government projects like Suzhou and Tianjin will be higher in future, so I think this (GKC) is a good model that we should explore going forward,”

“But there has to be a balance between private sector leadership and government support, and there has to be market demand for what’s being offered by the project” …

Located 35 kilometres from Guangzhou city centre, work is underway to turn the Guangzhou Knowledge City, currently a 123 square-kilometre site into a future magnet for industries like pharmaceuticals and info-comm technology, part of local authorities push for so-called high end industry.

 

Problems at Temasek’s StanChart & DBS/ OCBC ovepaid for HK bank?

In Banks, China, Emerging markets, Hong Kong, Temasek on 30/06/2014 at 4:50 am

Standard Chartered has said first-half operating profits will be 20% lower than a year earlier, blaming a slump in income from its financial markets business.

The warning comes only three months after the Asia-focused lender reported its first fall in annual profits for a decade.

The UK bank had been expected to show a modest bounce-back this year.

But it said tougher regulations and low market volatility had hurt revenues.

Standard Chartered said its interest rate and foreign exchange trading had been particularly hit.

Chirantan Barua, an analyst at Bernsteinm said: “Cyclical headwinds are yet to arrive in full force in the bank’s two key markets – Hong Kong and Singapore. Not that Korea or India is out of the woods either.

“Pack that in with a challenging and uncertain capital regime that won’t be resolved until the end of the year and you have a great deal of uncertainty around the stock.”

http://www.bbc.com/news/business-28031504

StanChart shows the peril of investing in a stock listed overseas overseas that operates internationally. When profits were gd, sterling was weak against all major currencies. When sterling is strong, profits no gd. Note the value of sterling is irrelevant to the underlying profits or losses of  most of bank’s international operations.

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ON AN afternoon in early summer a prospective customer walked into the gleaming new branch established in Shanghai’s free-trade zone by DBS, a Singaporean bank that, like many of its international rivals, has long touted China’s great promise for its business. The lobby was empty, save for a guard playing a video game. A log showed that the branch was attracting just two or three visitors a day. DBS remains optimistic about China and says that most of its free-trade-zone transactions are routed through other locations. But the torpid atmosphere at the branch points to foreign banks’ struggle to crack open the Chinese market.

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To be fair to DBS its New Citizen CEO is not like the FT CEO of OCBC who may have blundered.

OCBC is offering to buy Wing Hang Bank’s shares for 125 Hong Kong dollars (US$16.12) each, in a big bet on China’s sustained economic growth. OCBC hopes the deal will springboard its growth into mainland China through the Hong Kong bank’s cross-border operations, and give it a foothold in Macau.

OCBC and Wing Hang Bank, one of Hong Kong’s last remaining family-owned lenders, began discussions on a possible deal late last year, and in January entered exclusive talks (after ANZ and UOB balked at the family’s asking price), which were extended twice as they argued over price.

The most recent comparable transaction (and bargaining benchmark for the family), the 2013 sale of Chong Hing Bank, went for 2.35 times book value including the value of a special dividend related to Chong Hing’s real estate. Accounting for the increase Wing Hang ascribes to the value of its property, the OCBC offer is closer to 2 times book value, a discount, compared to the Chong Hing deal, considering Wing Hang’s return on equity averaged 11.3% for the past three years, versus 7.8% for Chong Hing, according to Capital IQ.

Still OCBC shareholders were not that happy and its share price suffered.

What is unknown is the value of Wing Hang’s Hong Kong real estate, on some of the busiest shopping streets in the world. These could be worth even more than the bank says. A government index of Hong Kong retail properties has risen 400% over the past decade. Yet the company’s revaluation over the acquisition cost of the property is less than 100%.

If enough of Wing Hang’s minority shareholders refuse the price on offer, however, OCBC might prefer to raise it or offer* or bear the cost of maintaining the Wing Hang listing, and the cost of failing to fully integrate the bank.

Update at 6’00am: Here’s someone who thinks OCBC got sold a dog.

Wing Hang gives it greater opportunity to finance trade between China and other parts of Asia such as Malaysia and Indonesia, where it already has a foothold. Wing Hang’s strong funding base – loans were just 73 percent of deposits at the end of last year – is another advantage, as is its ability to capitalise on the yuan’s growing international popularity. About 17 percent of Wing Hang’s deposits are currently in the Chinese currency.

Nevertheless, the purchase brings risks to OCBC investors. China’s economic slowdown is creating credit wobbles, while Hong Kong’s property boom is bound to have led to some lending excesses. Meanwhile, rising interest rates in the United States could reverse the cheap deposits that have flowed into both Hong Kong and Singapore in recent years. Shareholders, who will probably be asked to help finance the purchase, may pay a high short-term price for OCBC’s long-term China ambition.

 http://blogs.reuters.com/breakingviews/2014/04/01/ocbcs-chinese-ambition-comes-with-hefty-price-tag/

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*OCBC has said the bid, a 50% premium to the then stock price, is generous.

PM talking cock? Impossible to know if trade-offs are reasonable, fair or appropriate

In Political governance, Temasek on 29/06/2014 at 4:49 am

(Or “Shades of Orwell’s Big Brother?”)

Came across this thoughtful piece by Andy Mukherjee over the weekend. It explains clearly the issues and trade-offs Singapore faces in building our ideal society, while ensuring that Singaporeans have jobs and economic opportunities to build better lives and a brighter future.
As the article points out, we do enjoy important advantages compared to other countries, but it will still not be easy. There are serious trade-offs, which we must be willing to acknowledge and address. If we just pretend that everything can be better, and no hard choices are necessary, we will get into trouble. Mukherjee calls this “please-all economics”, and expresses confidence that Singaporeans are too pragmatic to fall for it. We must make sure that he is right. – LHL on FB two weeks ago

Piece PM raving about: http://in.reuters.com/article/2014/06/12/breakingviews-singapore-unrest-idINL4N0OQ07F20140612

But if we don’t know how much money we have, and how much are the returns the reserves are making for us, how can we judge if the trade-offs PM and his govt make are the right ones? After all he has as gd as admitted his govt got immigration, welfare, public tpt and public housing policies wrong by changing (sorry tweaking or is it evolving?) these policies.

And these were policies significant numbers (self included, and I note not M’sian new citizen Pussy Cat Lim who confines herself to general banalities) had been warning against for yrs. We were called “noise”, until the govt decided to change these policies.

This is what one LHL said many yrs ago when he was DPM and economic and financial czar:

The Singapore government, May 16, defended the secrecy surrounding its financial reserves of more than US$100 billion, saying it was not in the national interest to disclose details.
The veil of secrecy was necessary to protect the Singapore dollar from speculative attacks, Deputy Prime Minister Lee Hsien Loong said in parliament.

“It is not in the people’s interest and the nation’s interest to detail our assets and their yearly returns,” he said.http://www.singapore-window.org/sw01/010516a3.htm

This remains the govt’s stand.

And if I remember correctly, his dad once said that info reserves had to be kept a secret so that S’poreans couldn’t ask for more welfare, which they would if they knew how much money S’pore had. Readers correcting me or referencing the quote appreciated.I can’t find it via my googling.

In this mobile internet age, it is sad and self-defeating that the the PM and the PAP govt (ministers and civil servants) cling to the Leninist system that all information is political and can be designated a “state secret” at any time if the govt decides it does not help to bolster the govt’s or party’s own legitimacy and power.

BTW flaw in AndyM’s analysis which disqualifies from being an unbiased analyst

There is a fifth way which Mr Mukherjee has not considered. It is to reduce and reallocate government expenditures. In particular, the government can consider reduce defence spending so as to increase spending on welfare. This is a classic “Gun vs Butter” resource allocation problem studied in elementary economics. At present, Singapore is spending nearly a quarter of the $57 billion estimated government expenditures for FY2014 on defence alone (23% at $13 billion) … [TRE]

Maybe he aiming to be a PAP minister? He is a FT based here.

He did serious weight-lifting in 2011 at a Temasek briefing:First of all, congratulations on beating the sage of Omaha because [ … ] you seem to have out performed Warren Buffett on every horizon. He was BSing as Temasek and Berskshire cannot be compared ’cause Berkshire is listed, Temasek is not.

And if you think PM’s remarks on trade-offs when juxtaposed with his remarks  on the need for secrecy on reserves are Orwellian, his press secretary’s remarks in relation to Roy Ngerng are even more chilling:

… What is at stake is not any short-term positive or negative impact on the government, but the sort of public debate Singapore should have. When someone makes false and malicious personal allegations that impugn a person’s character or integrity, the victim has the right to vindicate his reputation, whether he is an ordinary citizen or the prime minister. The internet should not be exempt from the laws of defamation. It is perfectly possible to have a free and vigorous debate without defaming anyone, as occurs often in Singapore. Emphasis mine

Foster public debate by suing for defamation? Come on, pull the other leg, it’s got bells on it. I’m reminded of the slogans in 1984:

WAR IS PEACE
FREEDOM IS SLAVERY
IGNORANCE IS STRENGTH

 

 

 

SIR – I refer to the article “A butterfly on a wheel” (June 13th). You referred to an “alleged ‘serious libel’” by Roy Ngerng. This is not an allegation. Mr Ngerng has publicly admitted accusing Lee Hsien Loong, the prime minister, of criminal misappropriation of pension funds, falsely and completely without foundation. After promising to apologise and to remove the post, Mr Ngerng did the opposite; he actively disseminated the libel further. This was a grave and deliberate defamation, whether it occurred online or in the traditional media being immaterial.

What is at stake is not any short-term positive or negative impact on the government, but the sort of public debate Singapore should have. When someone makes false and malicious personal allegations that impugn a person’s character or integrity, the victim has the right to vindicate his reputation, whether he is an ordinary citizen or the prime minister. The internet should not be exempt from the laws of defamation. It is perfectly possible to have a free and vigorous debate without defaming anyone, as occurs often in Singapore.

Chang Li Lin
Press secretary to the prime minister
Singapore

- See more at: http://www.economist.com/news/letters/21604530-ukraine-singapore-employment-housing-food-trucks-john-birch-society-football-0#sthash.lPfPUP1T.dpuf

 

GIC, Temasek laughing all the way from Alibaba’s cave

In Financial competency, GIC, Private Equity, Temasek on 10/06/2014 at 4:47 am
FT reported a few moons ago on how Alibaba is likely to be valued in a coming US IPO:
Would-be buyers of Alibaba’s unlisted shares and convertible bonds have recently been making offers that value the group at $120bn-$150bn*, according to bondholders and others involved in the market …

That is a sharp contrast with 2012, when Alibaba issued the $1.6bn convertible bond to a small group of investors including Singapore’s Temasek and GIC.

At the time, Alibaba was valued at less than $40bn, two people with direct knowledge of the situation said. Under the terms of the deal, the bond will convert into equity upon completion of an IPO.

($= US$)

Temasek haters like Chris Balding and Heart Truths must be feeling sick. The bonds are worth 3 times the price that Temasek, GIC paid for them. Even at the low end valuation valuation of US$80bn, the bonds would have doubled in value. Keep on cursing Heart Truths and Chris Balding (and TRE posters). GIC, Temasek are like Sith Lords, they do well when you keep cursing them. LOL

Never mind, these rabid haters can bitch about the failure of an IPO where Temasek among other shareholders were trying to flip less than a yr after they went in. http://www.reuters.com/article/2014/04/30/wh-group-ipo-idUSL3N0NL2OL20140430. Investors tot they were too piggy in a pig farming IPO.

*Another view: Alibaba’s valuation, which a Breakingviews calculator estimates at $113 billion

 

Temasek’s Lim talks rubbish/ Olam helps African farmers

In Africa, Commodities, GIC, Political governance, Temasek on 03/04/2014 at 4:55 am

Temasek’s chairman Lim Boon Heng (the chap who cried when voting for casinos) was quoted by BT on 31 March as saying, “Coming from a little island nation with no natural resources except for some granite rocks, we are not a sovereign wealth fund in the normal sense of the term,” he said at a reception to mark the opening of Temasek’s new European office in London last Friday.

“Instead, we invest capital accumulated from generations of hard work and commitment by everyone in Temasek and the Temasek portfolio companies,” said Mr Lim in a speech at the Millennium Mayfair Hotel.

Well, I could reasonably say that he is talking rot*. It could be reasonably argued that part or most of money saved (via budget surpluses) could have been be more productively spent on making life better for S’poreans. It could have been spent on

– more hospital beds (http://www.tremeritus.com/2014/03/13/gan-says-hospital-beds-increased-by-30-really/),

– better public transport (Using back-of-the envelope calculations and figures in annual reports, since it was listed SMRT (over a decade ago) has paid S$562.79m in dividends to Temasek, and ComfortDelgro has paid the S’pore Labour Foundation (a statutory board affiliated to the NTUC) dividends of  S$150.46m since 2003 (Comfort and Delgro merged in 2003, and SLF had a stake in Comfort). The amount that ended up with the government was S$713.25m, with SMRT contributing 79%. But ComfortDelgro is likely be the main beneficiary of the S$1.1bn bus plan) (Italics added at 6.55am),

– low cost public housing (remember Mah saying that lowering the cost of land cheaper was raiding the reserves http://atans1.wordpress.com/2011/04/17/what-are-in-our-reserves-a-revisit/. Link also describes how budget surpluses and the reserves are linked),

– welfare for the elderly and needy. and

– education.

The list for the productive use of govt revenue rather than to play roulette or baccarat (OK, OK invest) can go on and on.

 

Leading local economists (not juz a wannabe opposition politican) have made this point about better uses of govt money than squirreling it away for a rainy day that never comes**. They juz don’t get reported by our constructive, nation-building media.

But maybe the govt is changing its attitude and Temasek is leading the way?

Olam is into sustainable, ecofriendly agriculture.

Sor and farmers from 36 communities in the Juabeso/Bia district are part of a project to produce climate-smart cocoa, claimed to the the world’s first. The $1m, three-year pilot collaboration between Rainforest Alliance (RA), an environmental organization, and Olam International, agricultural company, offers financial incentive to the farmers.

In the wild, cocoa trees grow under taller trees, which protect them from the scorching sun. But in Ghana as in neighbouring Ivory Coast, which together account for more than half the global supply, cocoa is grown as a monoculture.

“I had a lot of trees on my farm, but I cut and burned them. I thought they brought diseases, were a nuisance and took the place of cocoa,” says the mother of four, who owns a 4-acre farm in Eteso.  “I didn’t know about the importance of shade trees until I joined the group.”

(http://www.economist.com/blogs/baobab/2013/12/ghana)

Three cheers for Olam and Temasek for helping African farmers. Next stop S’pore SMEs?

Maybe Temasek is experimenting in Africa. Next an investment in a S’pore based co that helps S’poreans? Charity begins at home.

BTW, nice to see that GIC opened an office in Brazil. About time as Latin America is becoming unfashionable among the ang mohs.

GIC opened an office yesterday in Brazil, as it looks for more investment opportunities in Latin America.

The new office – its 10th globally – will focus on areas such as real estate, healthcare, financial and business services, and natural resources and infrastructure.

“Our presence in Brazil will enable our partners to engage early and interact closely with the GIC team, which is very beneficial for complex and sizeable investments,” said group chief investment officer Lim Chow Kiat.

“We believe our partners will gain from having access to GIC’s global network of business contacts and market insights. Although emerging markets remain volatile, we are confident of the long-term Latin America growth story.” (Yesterday’s BT).

These countries need capital, now that the ang mohs no longer like the area. China is investing there, BTW.

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*One of these days I’ll blog why ever since Devan Nai, Lim Chee Onn and Ong Teng Cheonf, we’ve had clowns as NTUC leaders. Lim may have been a failure as NTUC leader (Devan Nair fixed him), he he turned out to be a gd for Keppel, for which I’m grateful.)

**I hope thyose who think the world of Ong Teng Cheong realise that he wanted to look away even the returns from reserves away from the masses. Lee Hsien Loong and co got their way on using some of the returns on govt spending.

Investing in Indonesia is like eating puffer fish/ TRE readership

In Humour, Indonesia, Temasek on 29/03/2014 at 7:01 am

What do I mean by the former?

S$ is a strong currency, the rupiah a weak one; but this yr the rupiah has outpeformed

The rupiah has risen 7 per cent against the US dollar this year, making it the world’s strongest performing currency, while the Jakarta stock market is also rallying, now up 10 per cent. Yields on 10-year government bonds have also come down to 8 per cent, having jumped as high as 9.2 per cent last summer – another sign of fresh enthusiasm for Indonesia’s growth story. FT on 13th March).

Gd that we have a neighbour liddat as China’s growth slows. And Indonesia’s a MINT.

And whatever TRE posters* and Chris Balding say, Temasek has made gd money in Indonesia (think telco and banking, though it has yet to exit the latter) despite a hostile political environment. Money talks.

Too bad about its aggressive, civilian-killing armed forces that would loot and plunder S’pore if given half a chance. Whether we need to spend 25% of the Budget on defence is open to reasoned debate (something which the PAP govt rubbishes) but there is no doubt that we should continuing be a poisonous shrimp to deter Indonesian generals and admirals who want to loot and plunder. The Indonesian govt does not control the military, as the constant outbreaks of internal lawlessness (including the murder of civilians) by the armed forces shows.

Example: Two Indonesian ministers have expressed regret over the inappropriate conduct by two Indonesian marines who had posed as the MacDonald House bombers at the Jakarta International Defence Dialogue exhibition on Wednesday.

In response to media queries, a statement from Deputy Prime Minister Teo Chee Hean’s office said Mr Teo confirmed that Indonesian Coordinating Minister for Political, Legal and Security Affairs, Air Chief Marshal (Ret) Djoko Suyanto telephoned him on Friday afternoon regarding the incident.

Coordinating Minister Djoko expressed regret over the inappropriate conduct by the soldiers, and assured Mr Teo that there was no such policy to do so.

Those views were also repeated by Indonesian Defence Minister Purnomo Yusgiantoro, who spoke with Defence Minister Ng Eng Hen on the phone on Friday.

Dr Purnomo added that the Chief of Staff of the Indonesian Navy, Admiral Marsetio, had launched investigations to determine who was responsible for the inappropriate act. (CNA)

Or maybe juz two-timing? What do you think?

Taz another problem. The Javanese ruling elite loves to intrigue . Raffles knew what to do when they were two-timing, he sent in the army.

As to the quality of ministers: Indonesia’s communications minister, who has campaigned against pornography, has caused an uproar on social media after he followed a Twitter porn account …

http://www.bbc.com/news/blogs-news-from-elsewhere-26680779

Bottom line: Indonesia is a difficult place to invest in (as I can personally tell you), but get it right (I didn’t) and it’s life eating puffer fish. Can die, if not careful.

Related article: http://kementah.blogspot.sg/2014/03/not-business-as-usual-for-indonesia.html

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*Yes, TRE readers have written to me telling me that the majority of TRE readers are not losers like “oxygen” and those who call me names, but are “Calm Persistence” and “Hard-pressed Anxiety” types). They dislike being associated with losers: they are hard-working S’poreans who think that the PAP has betrayed them. As to why they don’t fund TRE, they say that that as typical S’poreans, they are free-loaders by nature and that I’m wrong to associate “Calm Persistnce” and “Hard Pressed Anxiety” with community spirit and generosity of spirit. . If they were not free-loaders and apathetic, then TRE would not be the voice of S’poreans. Err, kinda confusing. I got to think thru this paradox.

Olam: Hang on, buy for the ride?

In Africa, Commodities, Temasek on 18/03/2014 at 4:50 am

(Or “Temasek and Ho Ching haters getting more frus“)

Methinks that all those posters on TRE’s piece on Olam are banging their private parts real hard and crying in frustration http://www.tremeritus.com/2014/03/15/temasek-leads-consortium-to-buy-out-debt-ridden-olam/ . They missed making $ and are also upset that Temasek made gd (but peanutty ) money supporting Olam. Even those who pretend rationality while hating all things PAP ( s/o JBJ and Chris Balding?) can only sputter that if Olam is so gd, why buy now not earlier? May I suggest that they read FT’s Lex (behind paywall): squeezing the shorts leh; and Breakingviews (see below).

My tots on the stock: don’t tender the shares. Let’s go for the ride. At worse, kanna bot out if delisted. If buying lose only “peanuts” if kanna bot out. Remember my previous tots which TRE republished late last yr?

Last chance to buy Olam?

More bull points to add to this:

– When Olam released its quarterly results in early November, it showed it  had generated positive free cash flow – the first time in four years for a seasonally weak quarter.

Its executive director of finance and business development A Shekhar told analysts and reporters: “We’re very pleased that we’re striking the right notes on both objectives of profit growth as well as free cash-flow generation.”

– Ang mohs are still sceptical about the parts of the stock’s biz model.

– But they bulls on Africa and Olam got an edge there. Africa is now seen a destination mkt, not juz an exporter of commodities i.e. origination mkt:

The commodities houses are attracted to the African destination business for three reasons. First, demand is rising fast, in many cases at double-digit annual rates. Second, many African governments subsidise basic commodities such as petrol and wheat, in effect guaranteeing a return to the traders. Third, most African countries lack the infrastructure needed to import raw materials, from silos for storing wheat and rice to terminals for unloading petrol. The commodities houses say that, as they build this infrastructure, they will be able to secure a market and benefit from years of rising demand. (FT report on Africa dated 10 November 2013)

http://atans1.wordpress.com/2013/11/26/temasek-tales-tlc-overpaid-olam-cheong-wont-read-this-in-tre-toc/

This is what the deal’s all about (other than squeezing the shorts’ balls, hard real hard):

The most immediate beneficiary of the buyout is Olam’s creditworthiness. Despite Temasek’s minority shareholding, the company has faced persistent queries about its debt load. That’s particularly damaging for a trading house like Olam, which relies on the confidence of its counterparties. In future, creditors will view Olam as an extension of its sovereign parent.

http://blogs.reuters.com/breakingviews/2014/03/14/temasek-buyout-throws-sovereign-weight-behind-olam/

My next piece of advice to those TRE readers who keep on cursing Temasek and its CEO but who end-up banging banging their balls in frustration: Go analyse SMRT.

Trmasek and Ho Ching haters should come up with new lines of attack. The world has moved on from the crisis of 2007-2009. The recovery of global markets means that post Temasek’s losses on ABC Learning, Barclays and Merrill Lynch/BOA, performance has been in line with the recovery in world equity markets. Two of its dogs are dogs no more:  Shin is 50% up from its purchase price (though how to exit is an issue), and go check the price of Chesapeake. And the glee over Olam has turned to tears as Olam powers ahead, giving Muddy Waters a bloody nose. Big playpen bully has met a bigger bully. True blue S’poreans and xenophobes should be cheering Ho Ching on, not cursing her. But then hatred of the PAP is often irrational.

Temasek’s Asean tales

In Temasek, Vietnam on 22/02/2014 at 4:23 am

This week’s Asean’s round-up is all about Temasek or its TLCs.

Singapore state investor Temasek Holdings Pvt Ltd TEM.UL is seeking to sell its $3.1 billion stake in Thai telecom company Shin Corp INTUCH.BK, according to people familiar with the matter, and has approached its SingTel (STEL.SI) unit as a possible buyer. But the troubles in Thailand have put an end to the talks.

TRE and TOC readers will be banging their balls when they learn: The Temasek stake in Shin Corp, founded by former Thailand prime minister Thaksin Shinawatra, is worth $3.1 billion by current market value.

Shin Corp’s shares now trade more than 50 percent above the price paid in 2006 by a Temasek-led consortium, that included Chinese-Thai businessman Surin Upatkoon, when it bought 96 percent of the Thai firm for a total of $3.8 billion.

As for SingTel:

“At a fair price such a deal would make sense for SingTel,” Chris Lane, senior analyst at Sanford C. Bernstein in Hong Kong who covers Asia-Pacific telecommunications. SingTel is 52 percent-owned by Temasek.

Shin Corp owns 40.5 percent of Thailand’s biggest mobile telecoms company, Advanced Info Service Pcl ADVANC.BK. SingTel already has a 23 percent stake in AIS: Adding the Shin Corp stake would cement its position in a bigger market and offset sluggish growth in mature economies where it’s also present, like Australia.

“SingTel executives are involved in the day-to-day operations of the company AIS,” said Bernstein analyst Lane. “Buying the stake from Temasek avoids the possibility of another ‘telco’ securing a significant interest in AIS.”

http://www.reuters.com/article/2014/02/18/us-temasek-shincorp-singtel-idUSBREA1G1H520140218

FPT Corp, Vietnam’s largest publicly traded telecommunications and software company, has asked Temasek to help it identify a Singapore technology company for acquisition to boost sales overseas, the Bloomberg news agency reported.

FPT will spend as much as US$20 million (S$25 million) on a Singapore acquisition, Chief Executive Officer Bui Quang Ngoc said in an interview on Wednesday. The company, which had sales of 28.6 trillion dong (S$1.7 billion) in 2013, seeks to more than triple revenue from overseas to US$400 million by the end of 2016, co-founder Mr Ngoc, who took charge in July, said in Hanoi. “Singapore is a very attractive market,” Mr Ngoc said. “If we can be successful in Singapore, it means we have enough experience to do it in other countries.”

FPT is looking to acquire a Singapore company that specialises in software services such as inventory management, order processing and employee payroll, said Mr Duong Dung Trieu, chief executive officer of FPT Information System, a unit that contributes 25 per cent of the parent’s pretax profit.

The company plans to make the acquisition in Singapore “as soon as possible,” Mr Ngoc said. Temasek holds less than 5 per cent stake in FPT, according to the Vietnamese company.

Finally airport services and catering firm SATS (a listed TLC) agreed to buy a 41.65 per cent stake in Indonesian aviation and food service provider Cardig Aero Services for 1.1 trillion rupiah (S$118 million) to grow its business in South-east Asia’s largest economy.

Indonesia is a priority market said SATS. The country’s topography and a fast-growing economy and middle-class population will continue to drive greater demand for high-quality food and travel, it said. “CAS is an attractive investment opportunity in our core business which will generate sustainable value for our customers, employees and shareholders as Indonesia continues to grow,” said Mr Alexander Hungate, President and Chief Executive Officer of SATS.

And he’s right about Indonesia: http://www.economist.com/news/finance-and-economics/21596989-how-worlds-fourth-most-populous-country-weathering-emerging-market

StanChart losing its shine

In Banks, Emerging markets, Temasek on 22/12/2013 at 7:08 am

Standard Chartered had a bad start to the hols. Last Monday, its shares fell sharply on the possibility that it might call for a rights issue in the wake of weakish results. They’ve since recovered but there was another sharp fall on Fridaty, albeit from a much recovered position.

It has also been forced to strip its finance boss of his responsibilities to oversee the lender’s risk division following pressure from the Bank of England.

Richard Meddings, who has been group finance director of Standard Chartered since November 2006, had to hand over governance responsibility of risk to Peter Sands after the Prudential Regulation Authority said it was concerned with Meddings holding two conflicting roles, according to news reports.

In particular, the PRA, the Bank of England’s financial watchdog, was concerned with the potential conflict between Meddings’ finance responsibility and his duty to oversee risk operations.

All this against the background that it is no longer  an ang moh favourite because emerging markets are no longer in fashion. Their economies are slowing while the Western economies are recovering. And the wall of money is returning to the West.

BTW, those readers of TRE who bitch that Temasek lost money on StanChart and say that I didn’t know this fact are daft: all they needed to do is to google up StanChart’s 10 yr price. But if anyone wants to see the numbers: here’s why.

 

Temasek’s had gd yr on US energy investments

In Energy, Temasek on 17/12/2013 at 4:39 am

Many moons ago TRE told us that Temasek owns bonds in Chesapeake that are convertible at US$27 (issued when stock was around 23-25). And that the bonds were deeply underwater: the shares went as low as below 15 (Sorry the TRE link no longer is working ’cause of TRE’s new system of trying to get money from stone) Related post: http://atans1.wordpress.com/2012/09/13/gd-news-for-temasek-on-chesapeake/

Well over a yr later, the shares closed yesterday at  26.79, having traded as high as 27.50 in recent months. Let’s see if TRE updates its story on Chesapeake. Suspect pigs will fly first. What say you Richard, TeamTRE?

There’s more. On 16 August, MediaCorp’s freesheet (ST Lite) reported: Temasek Holdings has sold its 4 per cent stake in Cheniere Energy after a surge in the share price of the United States natural gas importer, just 15 months after it unveiled the purchase as part of its “longer-term interest” in the energy sector.

The move is a sign of Temasek’s willingness as a self-professed “active investor” to realise profits. But it also comes after Temasek last year billed the stake as part of a broader plan to cooperate with Cheniere and US private equity group RRJ Capital to take advantage of the US shale gas revolution.

“The shares had a decent run over the past year,” said Mr Enrico Soddu, an analyst at the London-based Institutional Investor’s Sovereign Wealth Center. “Temasek just seized the opportunity to make a solid profit.”

Temasek sold 9.2 million Cheniere shares either directly or through affiliates in the second quarter, valuing the stake at US$257 million (S$326.2 million), according to a quarterly filing of its US stock holdings with the US Securities and Exchange Commission.

Shares in Cheniere had climbed as much as 200 per cent by the end of the second quarter after Temasek and RRJ announced in May last year they would spend about US$468 million on an equity investment in Cheniere.

Temasek and RRJ were to have formed a marketing company with Cheniere to sell liquefied natural gas (LNG) in Asia in a bet on rising shale gas production and exports to the region.

Where S’porean traits produce world-class TLCs

In Energy, Indonesia, Temasek, Vietnam on 28/11/2013 at 6:25 am

More to irritate Temaeek and S’pore (self) haters, especially TRE readers*. There are advantages to S’poreans’ reputation as the Prussians of the East: hardworking, careful, conscientious and mindlessly efficient. These are very qualities that make Keppel and SembCorp world beaters in rig-building.

Singapore’s two main yards, Keppel and SembCorp Marine, have also invested heavily in quality and efficiency. They specialise more in deep-sea rigs than in drill-ships and carriers. Keppel, the bigger of the two, is building a record 20 such monsters this year; next year it will deliver the first of three giant, $600m “jack-up” rigs (ones that are floated into place then jacked up on their legs).

Time is money

The Singaporeans are also good at building things on time, which is vital in an industry where late delivery can cost the operators of rigs and drill-ships over $500,000 a day. Over the past five years, rigs ordered from Keppel and SembCorp were, on average, delivered ahead of schedule, whereas Chinese yards delivered 50-250 days late, says IHS Petrodata, a research firm.

http://www.economist.com/news/business/21590496-korean-and-singaporean-yards-have-adapted-well-chinas-challenge-deeper-better

As to China’s cost advantage, having facilities in Indonesia helps provide cheap labour for SembCorp’s rig building biz. Keppel too has an Indonesian operation, though its tiny compared to SembCorp’s.

And with Vietnam having problems with China over maritime boundaries, one wonders if Chinese built-rigs are allowed in its waters. Remember, energy cos are exploring for oil off Vietnam. Still, the waters do not require the sophisticated rigs built by these TLCs.

Related post: http://atans1.wordpress.com/?s=Temasek+Fab+5

*Though TRE readers will be pleased that these TLCs are not led by ex-generals or ex-Temasek MDs. The CEO of Keppel is a scholar, but I’m not sure of the background of CEO’s SembCorp. But both have worked that these TLs for many yrs. They were not parachuted in like in NOL to teach executives to suck eggs.

Temasek tales: TLC overpaid?/ Olam: Cheong?/ Won’t read this in TRE, TOC?

In Africa, Airlines, Commodities, Temasek on 26/11/2013 at 5:54 am

Changi Airport Group: Winner’s curse?

The Aeroportos do Futuro group led by Odebrecht SA, and including Singapore airport operator Changi Airport Group, offered 19 billion reais (US$8.3 billion) and won the right to run Galeao airport in Rio de Janeiro, which will host tourists for the soccer World Cup next year and the 2016 Olympic Games, for 25 years. The consortium offered nearly four times the minimum bid for the right to operate Rio’s Galeão airport for the next 25 years.

We will only know the consortium overpaid if we know the next highest bid. Will let you know if this info is made public in Brazil )))

Last chance to buy Olam?

More bull points to add to this:

– When Olam released its quarterly results in early November, it showed it  had generated positive free cash flow – the first time in four years for a seasonally weak quarter.

Its executive director of finance and business development A Shekhar told analysts and reporters: “We’re very pleased that we’re striking the right notes on both objectives of profit growth as well as free cash-flow generation.”

– Ang mohs are still sceptical about the parts of the stock’s biz model.

– But they bulls on Africa and Olam got an edge there. Africa is now seen a destination mkt, not juz an exporter of commodities i.e. origination mkt:

The commodities houses are attracted to the African destination business for three reasons. First, demand is rising fast, in many cases at double-digit annual rates. Second, many African governments subsidise basic commodities such as petrol and wheat, in effect guaranteeing a return to the traders. Third, most African countries lack the infrastructure needed to import raw materials, from silos for storing wheat and rice to terminals for unloading petrol. The commodities houses say that, as they build this infrastructure, they will be able to secure a market and benefit from years of rising demand. (FT report on Africa dated 10 November 2013)

Even Chris Balding flies SIA

Would the Temasek model help improve the efficiency of China’s state-owned enterprises? Only one (Singapore Airlines) or possibly two (DBS bank) of Temasek’s GLCs have established themselves as international brands, according to critics such as Chris Balding of Peking University*. SingTel has made successful foreign acquisitions, but other GLCs have fared less well. STATS ChipPAC, a semiconductor firm, lost money in the second quarter of this year, as a result of the costs of closing a factory in Malaysia.

The few academic studies of Singapore’s GLCs are more encouraging, however. A 2004 article by Carlos Ramirez of George Mason University and Ling Hui Tan of the IMF showed that the country’s GLCs enjoyed a higher market value, relative to the book value of their assets, than comparable private firms. They also generated a higher return on assets, on average.

In judging the performance of Temasek’s GLCs, the counterfactual is important. They may not be as obviously successful as private titans from the region such as Samsung or LG. But they are not nearly as bad as most SOEs, including China’s. The enthusiasm for reform of SOEs in China reflects their deteriorating returns and accumulating debt. According to M.K. Tang of Goldman Sachs, their return on assets was 6.5 percentage points below that of other Chinese firms in 2012 and their shares trade at a growing discount. Even Mr Balding, meanwhile, is happy to fly Singapore Airlines.

http://www.economist.com/news/finance-and-economics/21590562-chinas-rulers-look-singapore-tips-portfolio-management-soe-glc

*Cock Balding forgets Keppel and SembCorp in rigbuilding. More on these two cos later this week.

Temasek’s right on ICBC, BoC & CCB

In Banks, China, Temasek on 07/11/2013 at 4:52 am

I’ve blogged before that Temasek loves China banks while ang mohs were running away.

Well since late June, Chinese bank shares have been on a roll, example  ICBC (where Temasek had been picking up shares this yr) is up more than 22%. Recent Chinese economic data has got investors buying the banks again, ang mohs included. So much so that some smaller Chinese banks are planning IPOs in HK.

Anyway,Jack, the usual suspects, and the readers of TRE, TOC and TRS needn’t yet bang their [ ] in frustration. Firstly, Temasek can never ever exit these investments given that S’pore wants to be China’s friend. Temasek got big chunks of BoC and CCB at a “special” price.. It can only play around the margins, reducing its cost of these investments.

Then are there two more reasons why we should be worried about Temasek’s punt:-

The biggest threat to Chinese banks’ cozy oligopoly … Online groups Alibaba and Tencent are making incursions into the country’s financial services market, providing an alternative to the capped deposit rates and sluggish service offered by the country’s big lenders. The disruptors are taking on risks, and savers should be glad. http://blogs.reuters.com/breakingviews/2013/10/10/tech-disruptors-could-save-chinas-savers/

Alibaba, the e-commerce group that just bought a 51 percent stake in asset manager Tianhong for $193 million, is the banks’ main foe. By July it had made over $16 billion in short-term loans to companies who sell goods on its sites. Its real-time records of borrowers’ cashflows and counterparties aid lending decisions.

Banks’ deposits are also under threat. WeChat, the mobile chat app that clocked up over 300 million users within two years of being launched by gaming group Tencent, is working on distributing wealth products via smartphones, and offering payment for fund managers, according to Chinese media. Alibaba lets users reinvest surplus balances in their online payment accounts into money market funds. That gives savers a better return than the 3 percent capped rate they get on bank deposits.

Tech companies’ desire to disrupt the financial services sector is understandable. China’s big banks make returns on equity in excess of 20 percent.

Add to that, an attempt to shake up the country’s slow-moving financial industry and create more investment opportunities for the private sector, Chinese regulators have invited companies from across the spectrum to apply for banking licences.
And here’s the latest on bad debt write-offs (something I had talked about) http://www.bloomberg.com/news/2013-10-22/biggest-china-banks-triple-debt-write-offs-to-brace-for-defaults.html.
So Jack, etc can relax. Time enough for their curses on Ho Ching to take effect. I hope they remember that returns from the reserves are used to make life more comfortable for ourselves.

Time to chk out Olam

In Commodities, Temasek on 05/11/2013 at 4:30 am

When Muddy Waters ends up saying: “My view is that if Temasek decides tomorrow that it wanted out of this investment, it would be game over within months for them, without Temasek’s backstop,” its research director Carson Block told BT late  last week.(http://www.businesstimes.com.sg/premium/top-stories/muddy-waters-game-over-olam-if-temasek-pulls-out-20131101), its time to think it’s repenting its decision, a yr ago, to short Olam.

It’s stating the obvious. Any highly leveraged smallish stock where Temasek  exits from being a major shareholder would suffer. Temasek 1, MW 0.

Temasek has also since then progressively increased its ownership of Olam, from an initial 16.3 per cent before the Muddy Waters attack to 24.07 per cent now. Temasek 2, MW 0

In Mr Block’s view, Temasek had stepped in because of the wider implications that an Olam collapse would have posed to the commodity-trading industry in Singapore.

“If Olam had failed, what would the banks have done with the other commodity houses that are borrowing in Singapore?” he said. “It’s reasonable to assume that if the banks had to write off losses to Olam, you could have a real funding freeze for the commodity trading industry in Singapore.”

This is again stating the obvious. Temasek 3, MW 0

Funny, he didn’t bitch that BT continues to act as a chher leader for Olam. (http://www.cpf.gov.sg/imsavvy/infohub_article.asp?readid={904134059-19528-1412927508}) Temasek 4, MW 0

Maybe the narrative that Olam is changing doesn’t fit his bearish thesis. Olam is building a packaged foods business. In countries such as Nigeria, Ghana and Mali,, where it now generates sales of US$350 million, and aims to be the Unilever or Nestle of Africa. Might be interesting. Have to chk out waz this as % of total revenue and net profits. Sadly the article doesn’t give this which makes me suspicious that it’s a tiny share. Still will chk, and anyway Africa is a hot market. Temasek 5, MW 0

Final bull point, Olam did stop doing some things that Muddy waters was rightly bitching about. It shows mgt is pragmatic and flexible (Temasek 6, MW 0) , unlike the PAP govt on the FT policy (Remember the White Paper?).

Interestingly, Olam is one of the cos having an open day: a great idea.

MORE listed companies with large numbers of retail shareholders are setting aside time for the management to meet investors.

In a new trend, these companies are holding a “retail investor day” as well as the mandatory annual general meeting (AGM).

Usually, retail investors get to meet and question senior management only at the AGM.

Companies which have already held “investor day” events include Olam International, Aims AMP Capital Industrial real estate investment trust and bourse operator, the Singapore Exchange (SGX).

http://www.cpf.gov.sg/imsavvy/infohub_article.asp?readid={904134059-19479-584331750}

Oh and from the first BT report, it seems Muddy is still shorting Olam, Temasek 7, MW 0.

Temasek’s Fab 5 S’pore blue chips

In Financial competency, Temasek on 03/10/2013 at 5:11 am

Regolar readers will know this blog’s hostile to ST esp in its personal investment coverage.And usually is critical of Temasek.

Here’s an exception: If you owned one or more of these blue chips, you would be really ungrateful not to vote for PM

http://www.cpf.gov.sg/imsavvy/infohub_article.asp?readid={435478142-19236-1456515192}

Data from SGX My Gateway and Bloomberg showed aircraft engineering firm SIA Engineering Company topping the list, with a total return of 164 per cent over the five years to Sept 13, the cut-off date for this exercise. This includes price increases and cash dividends paid out, and works out to a compounded 21 per cent a year.

Telecommunications firm StarHub, engineering firm Singapore Technologies Engineering and rig builders Keppel Corporation and Sembcorp Marine round up the rest of the top five.

One key thread of these firms is that they are all part-owned by Temasek, which probably adds to the confidence of investors.

They are all also known for being solid with their dividend payments … Of course the share prices reflect that fact i.e. that there are better yields in the market albeit with greater risk.

Disclosure: got Keppel for yonks, and odd lot of SIAEC.

Our world class Chinese banks need US$50-500bn more in capital

In Banks, China, Temasek on 12/09/2013 at 4:56 am

This blog has been pointing out why ang mohs don’t like Chinese banks, while Temasek loves them.

This short video shows the strengths of Chinese banks in size and income from interest (Big 4 in global top 10). The latter must surely be a consideration in why Temasek invests in three of them.

http://www.economist.com/blogs/graphicdetail/2013/09/daily-chart-1

Now back to the worrying analysis:

– With bad loans and competition rising, China’s largest banks face tougher times ahead. ChinaScope Financial, a research firm partly owned by Moody’s, a ratings agency, has analysed how declining net interest margins will affect China’s banks. It estimates that the sector will need an injection of $50 billion-100 billion over the next two years just to keep its capital ratios at today’s level. The managements of the Big Four realise this, and have won approval from their boards to raise over $40 billion in fresh capital over the next two years. But Andrew Sheng of the Fung Global Institute, a think-tank, reckons the sector will need to raise even more later: up to $300 billion over the next five years.

http://www.economist.com/news/finance-and-economics/21584331-four-worlds-biggest-lenders-must-face-some-nasty-truths-giant-reality-check

– China’s bad debts could blow a $500 billion hole in bank balance sheets. That’s roughly how much extra equity the eleven biggest lenders might need if 10 percent of their loans went sour, according to a Breakingviews calculator.

http://blogs.reuters.com/breakingviews/2013/09/04/chinas-bad-debt-could-leave-500-bln-equity-hole/

Temasek’s Chinese banks pay great dividends but there’s a catch

In Banks, Financial competency, Temasek on 20/08/2013 at 5:01 am

ICBC pays 6.1%, while CCB and BoC pay 6%. If it had AgBank, it would get 6.4%.

Contrast this with the dividend yield it gets from

– DBS: 4.4% (UOB’s yield is 2.9% and OCBC’s is 3.2%)

– Bank Danamon: 2.4%

– StanChart: 3.5% (BTW,  earlier this month the bank said  that it was no longer targeting double digit revenue growth this year. Year-on-year revenue growth in the first six months was less than 5% for the first time in 10 yrs.)

But Chinese bank yields are so gd largely because Chinese banks are not popular with ang mohs: one-tenth share price falls this yr helped produce these yields. http://atans1.wordpress.com/2013/07/02/time-to-worry-about-temaseks-strategy-on-chinese-banks/

And there are gd reasons to be fearful. One is concern that there could be more bad debts building up in the system as the economy slows/

Another: ChinaScope Financial, a research firm, has analysed how increased competition and declining net interest margins will affect banks operating in China. The boffins conclude that the smallest local outfits, known as city commercial banks, and the middling private-sector banks will be hit hardest, but that returns on equity at the big five state banks will also be squeezed (see chart). They think the industry will need $50 billion-100 billion in extra capital over the next two years to keep its capital ratios stable.

The bigger worry for China’s state banks is the signal sent by the PBOC’s move. The central bank has affirmed its commitment to reform. If those reforms include the liberalisation of deposit rates, then something far more serious than a minor profit squeeze will befall China’s banks. Guaranteed profitability would end; banks would have to compete for customers; and risk management would suddenly matter. In short, Chinese bankers would have to start working for a living.

http://www.economist.com/news/finance-and-economics/21582290-chinas-central-bank-has-liberalised-lending-rates-does-it-matter-small-step

And two of China’s four “bad’ banks (they bot portfolios of dud loans from Chinese banks, the last time the Chinese cleaned up their banks in the late 1990s and early noughtie), are planning to raise capital via IPOs. They have impressive returns. But maybe China is preparing for the day it has to recapitalise the banks again. In such a case, the UK and US experience is that the other shareholders get diluted, and can lose serious money. Think UBS and RBS.

Even if there is no recapitalisation, there are likely to be rights issues, something that ang moh fund mgrs don’t like.

But to be fair, this big chart shows a possible reason why Temask is optimistic. Despite loan growth, bad loans are falling. But the economy was growing rapidly. And sceptics point out that the numbers may be flakey. In the 1990s, the real bad loan position was 20%, not the lowish figures reported at the time. Investors forget this ’cause banks were 100% govt owned.

Related (sort of) link: http://wikileaks.org/cable/2009/06/09SINGAPORE588.html

Graphics from FT.

DBS, Temasek, Indonesia all lose

In Indonesia, Temasek on 06/08/2013 at 5:02 am

Maybe DBS should blame VivianB (and the PM) for taking a hard stand on the haze issue, even though this blog supports their stance because the Indon govt is naturally devious on this and other issues.

Seriously, DBS, Temasek and Indonesia all lose following DBS’ decision to allow its agreement to buy Temasek’s stake in Bank Danamon to lapse after the Indons only allowed it to buy up to 40% of Bank Danamon. It wanted DBS’s entire 67% stake and more: see Backgrounder at end of article for details.

Why DBS loses

Piyush Gupta, pulling his [US]$6.5 billion bid for PT Bank Danamon Indonesia, said his ambitions in Southeast Asia’s largest economy may be set back by about five years.

The lender had sought a controlling stake in Danamon as part of a strategy to expand in markets outside Singapore and Hong Kong, which jointly accounted for 83 percent of its profit in 2012. Average net interest margins for banks in its home market are 1.82 percent, according to data compiled by Bloomberg based on the latest company filings, lagging behind lenders in the rest of Southeast Asia. In Hong Kong, the measure is even lower at 1.66 percent, the data show. [Note that DBS gets 80% of its profits from S'pore and HK.]

In contrast, Indonesian lenders are the most profitable in the world’s 20 biggest economies, data compiled by Bloomberg show. Banks with a market value of at least $5 billion boast an average net interest margin of 6.6 percent, the data show.

DBS’s net interest margin shrank to 1.62 percent last quarter from 1.72 percent a year earlier, today’s earnings report showed. That’s the 15th straight year-on-year decline.

http://www.bloomberg.com/news/2013-07-31/dbs-drops-6-5-billion-danamon-bid-after-failing-to-win-control.html

Note too that DBS doesn’t have much of an Asean presence outside S’pore. It has no retail network in peninsula Malaysia, unlike UOB and OCBC: a failure of its botched attempt to takeover OUB in the early noughties. And unlike Maybank and CIMB, its M’sian rivals, it has only “peanuts” in Indonesia. They, Maybank, in particular, have thriving and biggish S’pore operations.

“DBS missed out on a value-creation opportunity,” Kevin Kwek, an analyst at Sanford C. Bernstein & Co. … The bank “will have to build up a presence in Indonesia the longer and harder way.”

“Indonesia was supposed to give them a leg up in terms of growth,” said Julian Chua … at Nomura … “There may not be that many willing sellers of such a sizable bank.”

If you are wondering why the shares are up then, investors think DBS may use the $ to return some capital. Besides, the issue of shares to Temasek would have been dilutive. And Indonesia’s economy is slowing.

FTs can be blamed for these historical failings, though Gupta and his deputy are exceptions to the rule that in DBS the “T” stands for “Trash”, not “Talent”. They have stabilised DBS’ operationally. And are trying to repair the damage done by DBS’ earlier FT inspired strategy of buying non-controlling stakes in regional banks.

Why Temasek loses

Its involvement as a shareholder in both banks helped spark an anti-Singapore political backlash in Indonesia. The value of its investment has also been reduced by new Indonesian restrictions which limit single bank shareholders to a 40 percent stake. That makes Danamon a less attractive target because Basel capital rules make it expensive for banks to hold minority stakes in other lenders.

However, Temasek can also take comfort. It is under no immediate pressure to sell. And though Danamon shares fell by more than 13 percent on Aug. 1, Temasek’s 67 percent shareholding is still a highly successful investment.

The Japanese banks are seen as interested in the 40% stake that it can sell. They have been buying minority stakes in Indonesia and the region http://atans1.wordpress.com/2013/07/06/asean-round-up-30/, http://atans1.wordpress.com/2012/12/29/jappo-banks-step-up-presence-in-asean-region/

Why Indonesia loses

lost http://blogs.reuters.com/breakingviews/2013/08/01/indonesia-biggest-loser-from-bank-merger-flop/

Here’s an alternate view that DBS and S’pore lost more than Indonesia: http://www.themalaymailonline.com/what-you-think/article/singapore-loses-much-more-than-indonesia-in-dbs-decision-vincent-lingga. I’m sure TRE posters and Balding would agree with this view.

Backgrounder from Bloomberg

DBS had proposed acquiring the 67.4 percent stake in Danamon held by Fullerton Financial by allowing it to swap its Danamon holdings into DBS shares. The exchange was to be at a price of 7,000 rupiah for each Danamon share and called for DBS to issue 439 million new shares to the Temasek unit at S$14.07 apiece, increasing the stake held in DBS by Singapore’s state-owned investment company to 40.4 percent from 29.5 percent.

Following that transaction, DBS would have made a tender offer for any remaining Danamon stock at 7,000 rupiah a share, taking its holding in the Indonesian bank to 99 percent.

Norway’s SWF: transparency & performance not exclusive

In Corporate governance, Financial competency, GIC, Temasek on 15/07/2013 at 5:09 am

From FT

Transparent, yet doing well.So large it owns an average 1.25% of every listed company in the world, or 2.5% of every European listed company.

Temasek, GIC and govt can learn from Norway? Pigs will fly first, I suspect.

Update two hrs after publication:

Unlike Temasek, it ain’t big on Chinese banks

Temasek owns big chunks in three out of four China’s major banks

– 2% of Bank of China

– 8% of China Construction Bank

8% of Industrial & Commercial Bank of China,

Temasek has accumulated more than [US]$17 billion of holdings in Beijing-based ICBC, China Construction Bank Corp. (939) and Bank of China Ltd. over the past two years, according to data compiled by Bloomberg. Global firms including Goldman Sachs and Bank of America Corp. have divested holdings as new capital rules known as Basel III make it more expensive to hold minority stakes in banks. (Bloomberg few days ago)

http://atans1.wordpress.com/2013/07/02/time-to-worry-about-temaseks-strategy-on-chinese-banks/

BTW

Temasek has stakes in three out of the four biggest Chinese banks. It therefore has stakes in the world’s largest, fifth and 9th largest banks. It doesn’t have a stake in Agriculutural Bank, the 10th largest.

Temask is halal, sort of

In Humour, Temasek on 04/07/2013 at 4:43 am
Jeffrey Fang, associate director of corporate affairs for Temasek, in response to a query from BT in early June*, said: “As a matter of policy, we do not invest directly in casinos or tobacco companies at the Temasek level – this is a deemed interest due to the aggregation of the direct or indirect investment stakes held by the Temasek subsidiaries.”
But a few days later, it was reported in FT that Temasek has a almost 3% stake in Shuanghui International, the Chinese owned entity that is bidding for Smithfields, the world’s biggest pork producer, based in the US.
So two-thirds halal?
—-

* Context Fullerton Fund Management Company (FFMC), a subsidiary of Temasek Holdings, has bought a 5.02 per cent stake in Melco Crown Philippines Resorts Corp.

FFMC has acquired 222.2 million Melco shares, according to the company, which is listed on the Philippine Stock Exchange.

Melco is the Philippine unit of Nasdaq-listed Melco Crown Entertainment, which is backed by Lawrence Ho, a relative of Macau casino mogul Stanley Ho.

Time to worry about Temasek’s strategy on Chinese banks

In Banks, China, Temasek on 02/07/2013 at 5:07 am

Temasek owns big chunks in three out of four China’s major banks

– 2% of Bank of China

– 8% of China Construction Bank

8% of Industrial & Commercial Bank of China,

Temasek has accumulated more than [US]$17 billion of holdings in Beijing-based ICBC, China Construction Bank Corp. (939) and Bank of China Ltd. over the past two years, according to data compiled by Bloomberg. Global firms including Goldman Sachs and Bank of America Corp. have divested holdings as new capital rules known as Basel III make it more expensive to hold minority stakes in banks. (Bloomberg few days ago)

S’poreans have to keep a beady eye on developments in the Chinese economy particularly in the financial sector.

Well things don’t look that rosy:

There is of course a second and much more disturbing possible implication of spiking lending rates in China – which is that the slowdown in credit creation will lead to tumbling asset prices, widespread bankruptcies and the crippling of the banking and wider financial system …

According to a recent and influential report by Fitch, outstanding loans by Chinese banks and shadow financial institutions were equivalent to 200% of GDP at the end of 2012, up from around 125% of GDP in 2008.

 As quantum, domestic business and household debt at two times GDP is high – pretty similar, for example, to a debt burden on the UK private sector which has hobbled our [UK] economy.

 But it is the stunning and unsustainably rapid rate of growth in Chinese credit creation, and who has borrowed the money, that are the main sources of concern.

 Unless China is re-writing financial history, much of that money will have been lent without due care to businesses and individuals, and many of them will never be able to repay much of it.

 As and when that is too conspicuous to ignore, banks and financial institutions will go bust – unless bailed out by central bank and government. http://www.bbc.co.uk/news/business-23000323*

Well in the case of the UK, two major banks were effectively nationalised, and the existing shareholders were left with “peanuts”. And UBS and Citi received injections of cash from their central banks in exchange for securities, exchanges that diluted their other shareholders, including GIC.

In 2007/2008, our SWFs’ bot into UBS (GIC), Citi (GIC) and Merrill Lynch (Temasek) in a big way that ST characterised then as showing S’pore was a tua kee investor.

We lost serious money in two of the 30-yr investments by 2009.

– Estimate of Temasek’s losses on ML and Barclays:

http://atans1.wordpress.com/2010/08/04/swee-say-said-that-gd-temasek-lost-billions/

– Estimate of GIC’s loss on UBS:

http://atans1.wordpress.com/2011/07/26/gic-not-reported-in-st-cna-or-today/

(BTW, Temasek’s 2012 purchase of Credit Suisse mandatory bonds:

http://atans1.wordpress.com/2012/07/22/third-time-lucky-temasek/)

Hopefully Superwoman Lina Chiam will raise the issue of Temasek’s strategy doubling up on Chinese banks in parly so that the finance minister’s rebuttal of her concern, will be a matter of public record,  come the next GE.

*And not only ang mohs are worried about China and its financial system: http://blogs.reuters.com/breakingviews/2013/06/28/review-tales-from-chinas-wild-lending-frontier/

Govt does listen, at least PM’s wife does

In Temasek on 11/06/2013 at 5:53 am

New DBS-Fullerton fund targets small investors

SMALL investors with just $1,000 now have a chance to dabble in an investment fund linked to Temasek Holdings.

Temasek’s Fullerton Fund Management has tied up with DBS Bank to launch the new investment fund with a focus on Asian equities and fixed-income securities. ST

http://www.cpf.gov.sg/imsavvy/infohub_article.asp?readid={309678777-17694-9216991662}

A few yrs back, netizens were screaming their heads off, cursing Temasek when it said it (via Fullerton) was planning to move into fund mgt: for foreigners. It was pointed out that this was unfair to S’poreans especially smaller investors who were getting “peanuts” 2.5% and 4% on their CPF monies.And that Temask’s staff were paid (indirectly) by the tax-payer but foreigners were getting the benefit of their expertise.

Funnily, these same netizens were bitching that Temasek was a lousy investor of S’pore’s money.

Anyway this new fund shows the govt (or at least Temask) does listen. LOL. Not that netizens care, ’cause thry’ve moved on to the next bitch LOL. Taz ’cause the internet is like water: always moving on.

Asean round-up

In Casinos, Temasek on 08/06/2013 at 9:27 am

Thais love debt: CP All, the Thai retailer controlled by tycoon Dhanin Chearavanont, borrowed $6 billion in May to fund a $6.6 billion takeover of Siam Makro, the Thai cash-and-carry group. Low interest rates and the hidden value in Siam Makro’s property portfolio mean the purchase can support hefty borrowing without any synergies. And in January another Thai tycoon, Charoen Sirivadhanabhakdi, won the battle for control of Fraser and Neave with a debt-heavy $11.2 billion offer based largely on breaking up the Singaporean conglomerate.

1997/1998 again? Both had problems then, esp the former.

Easy come, easy go:The main Philippines equity index has tumbled 11% and the Thai index 8.4%  since May 22 when the Fed’s chairman talked of restraining QEIII. Still up on the yr, unlike S’pore.

Convert to gambling and the Philippines? Fullerton Fund Management Company (FFMC), a subsidiary of Temasek Holdings, has bought a 5.02% stake in Melco Crown Philippines Resorts Corp.

FFMC has acquired 222.2 million Melco shares, according to the company, which is listed on the Philippine Stock Exchange.

Melco is the Philippine unit of Nasdaq-listed Melco Crown Entertainment, which is backed by Lawrence Ho, a relative of Macau casino mogul Stanley Ho.

BBC discovers Burma

http://www.bbc.co.uk/news/business-22721804

http://www.bbc.co.uk/news/business-22781224

http://www.bbc.co.uk/news/business-22776521

Asean round-up

In Banks, Indonesia, Temasek on 25/05/2013 at 6:20 am

Growing faster than Greater China

South East Asia is expected to drive growth in the luxury market in Asia this year. Analysts at Bain and Co predict that luxury goods sales will grow by 20% in 2013: Greater China only 6% http://www.bbc.co.uk/news/business-22564297

How Myanmar will connect up Asia

http://www.economist.com/blogs/graphicdetail/2013/05/daily-chart-9

Great graphics: explains how the opening up of Burma will allow ships to by-pass the Malacca Straits.

DBS’ woes

DBS Group Holdings is hoping it will have to settle for the minority stake (40%) it has been offered in Indonesia’s Bank Danamon. It hopes that talks between the central banks of Indonesia and Singapore will clear the way for a majority takeover. Pending these, it may ask for an extension from seller Temasek Holdings.

Note that because UOB and OCBC have a bigger regional presence (thks to legacy branches in M’sia), they trade at a 25% to DBS in terms of book value.

Failed at Olam, now trying luck at StanChart

In Banks, China, Temasek on 14/05/2013 at 6:55 pm

 

Carson Block Is Shorting Debt of Standard Chartered

 

 

Carson Block, the short-seller who runs Muddy Waters LLC, said he’s betting against the debt of Standard Chartered Plc (STAN) (STAN) because of “deteriorating” loan quality, triggering a 13.5 percent jump in the cost of insuring against losses on the debt of the British lender.

http://www.bloomberg.com/news/2013-05-12/carson-block-says-he-s-shorting-standard-chartered-debt.html

Somehow I don’t expect StanChart to go berserk like Olam, “Carson Block is outside of the bank and does not have access to the bank’s loan files,” said Jim Antos, a Hong Kong-based analyst at Mizuho Securities Asia Ltd. “He has very little ammunition in his gun to shoot at Standard Chartered at this point. He’s got one example of a large loan that appears to be something that possibly would not have been prudent to book.”

MSM, less triumphalism when puffing up GIC, Temasek

In Financial competency, GIC, Media, Temasek on 09/04/2013 at 6:16 am

Pls remember what someone who manages more $ than GIC, Temasek says abt performance

Clearly the ability of the investor to adapt to the market’s “four seasons” should be proof enough that there was something more than luck involved? And if those four seasons span a number of bull/ bear cycles or even several decades, then a confirmation or coronation should take place shortly thereafter! First a market maven, then a wizard, and finally a King. Oh, to be a King.

 But let me admit something. There is not a Bond King or a Stock King or an Investor Sovereign alive that can claim title to a throne. All of us, even the old guys like Buffett, Soros, Fuss, yeah – me too, have cut our teeth during perhaps a most advantageous period of time, the most attractive epoch, that an investor could experience. Since the early 1970s when the dollar was released from gold and credit began its incredible, liquefying, total return journey to the present day, an investor that took marginal risk, levered it wisely and was conveniently sheltered from periodic bouts of deleveraging or asset withdrawals could, and in some cases, was rewarded with the crown of “greatness.” Perhaps, however, it was the epoch that made the man as opposed to the man that made the epoch.
PIMCO’s Bill Gross

Chinese financial sector: there be storms and shaols

In Banks, China, Temasek on 31/03/2013 at 7:06 am

(Backgrounder: Temasek has biggish stakes in three out of the four major  Chinese banks: doesn’t have shares in Agricultural Bank and CapLand is big and bullish on China).

Credit issues in Pearl Estuary region:  http://blogs.reuters.com/breakingviews/2013/03/27/chinese-credit-alarms-sound-in-the-east/

And New rules will force mainstream lenders to cap their exposure to some of the riskier off-balance sheet products they have sold to customers – in particular, those that are effectively repackaged corporate debt. That limits a big source of risk for banks, but creates a new one for the Chinese economy.

http://blogs.reuters.com/breakingviews/2013/03/28/china-shadow-bank-curbs-attack-symptom-not-cause/

The junk bond market in China took off this year. Although the deals still account for a small share of the global total, Chinese companies have sold $8 billion of high-yield bonds to overseas investors since January. That’s up from $2.3 billion during the same period a year earlier, according to figures from Dealogic … the Chinese market has its own set of potential problems, and some analysts worry that investors aren’t being properly compensated for the added layer of risks.

he bulk of the high-yield bonds in Asia this year — roughly half — come from Chinese real estate companies. The fear is that the housing market, which has been booming, is a bubble that will eventually burst.

Mainland China’s domestic bond market remains largely off limits to foreign buyers. So most investors buy offshore Chinese bonds, which are issued through holding companies headquartered in places like the Cayman Islands.

The bonds tend not to be backed by the actual businesses and underlying assets in mainland China. That means foreign bondholders may have little legal recourse if a company defaults on its debt, especially if local banks or other Chinese creditors make claims.

Bondholders are now facing such difficulties with the bankruptcy of Suntech Power.

http://dealbook.nytimes.com/2013/03/28/as-pace-of-chinas-junk-bond-sales-grows-so-do-worries/?nl=business&emc=edit_dlbkpm_20130328

Citi sees shareholders* no ak, ignores their wishes

In Banks, Corporate governance, Temasek on 07/03/2013 at 5:37 am

Citigroup Makes Preparations for Profit-Sharing Plans Executives of Citigroup “stand to collect $579 million under profit-sharing plans that include the one shareholders voted against last year. The lender booked a $246 million expense in 2012 tied to the plans, adding to $285 million for the previous year and $48 million in 2010, according to regulatory filings,” Bloomberg News reports.

Charles Peabody, an analyst with Portales Partners LLC in New York, said the payouts are difficult to justify given last year’s shareholder rejection. Peabody, who told clients in a 2011 note that he was “dismayed” by the lack of stringent financial thresholds in that year’s plan, said today that Citigroup hasn’t done enough to tie pay to performance.

“The compensation plan was a travesty,” said Peabody, who has an underperform rating on the shares. “Citi’s board and management team continue to make a mockery of shareholder, political and regulatory demands that compensation reflect performance.” …The profit-sharing payouts are on top of annual salaries and bonuses granted to senior executives …

… Citigroup’s use of pretax profit to grant awards “sets the bar too low,” said Hodgson, the compensation analyst. “They’re not looking at anything else apart from pretax income, which is just not a good enough measure of a bank’s performance.”

*GIC still has a slug of Citi

Bang balls Temasek haters: Standard Chartered’s Profit Rises Despite U.S. Fine

In Banks, Temasek on 06/03/2013 at 10:07 am

Standard Chartered posted a slight increase in annual net profit in 2012. Its businesses in emerging economies offset a US$667 million fine in the United States connected to illegal money transfers.net income rose less than 1, to US$4.8 billion, compared with 2011, while revenue rose 8%, to US$19.1 billion. It was the 10th consecutive year that Standard Chartered had reported a yearly increase in its profit. Its vast operations across Asia, Africa and the Middle East helped protect the bank from many of the problems affecting developed economies like the United States and Europe … Standard Chartered has continued to expand in emerging markets by taking advantage of growing demand for financial services from both local companies and international entities looking to invest.

The bank said its operating income in China grew 21 percent last year, to $1 billion, as it benefited from expanding its local branch network sixfold since 2003. Standard Charted said it was now active in 25 emerging economies where its annual growth was in double digits.

http://dealbook.nytimes.com/2013/03/05/standard-chartereds-profit-rises-after-u-s-fine/?nl=business&emc=edit_dlbkam_20130305

Asean round-up

In Banks, Telecoms, Temasek, Vietnam on 02/02/2013 at 7:08 am

In Vietnam, the government’s planned sale of a 20% in Sabeco, a brewery,  is expected this year, according to bankers.

Wilmar, one of Asia’s largest agribusinesses, and Cargill, the commodities’ trader are setting up in Burma.

18 companies, including Malaysia’s Axiata, Norway’s Telenor Group, parent of the Thai mobile operator DTAC, Digicel, the Caribbean based operator, and two Singaporean companies, Singapore Telecommunications, one of southeast Asia’s biggest telephone companies, and ST Telemedia, a unit of Temasek Holdings, have submitted proposals for the two telecoms licences

The Burma has abolished a 25-year-old ban on public gatherings of more than five people: more liberal than S’pore.

Malayan Banking Bhd (Maybank) has made a US$100 million capital injection into its Philippines operations.The banking group, the fourth largest in the region, on the previous Friday launched a new corporate head office in Manila and announced plans to double its number of branches in that country to 100 by 2014, and thereafter to 200 by 2018, Malaysia’s Business Times said.

It currently has 54 branches there, with another expected to open in the city of Davao by the end of this month.

Maybank Philippines Inc (MPI), which has been operating since 1997 and is now the 24th largest bank by assets, may eventually go for a listing there. The Philippine central bank had last year issued a directive, requiring banks controlled by their foreign counterparts to go for a listing on the Philippine Stock Exchange.

PM, what about asking the right questions? Or at least different ones

In Economy, Political economy, Political governance, Private Equity, Temasek on 29/01/2013 at 7:52 am

“Do you want faster growth or do you want fewer foreign workers? Do you want more hard work or more leisure? Do you want more competitive schools and good results and good futures, or more relaxed schools and fall behind? How can we find that balance in between?” the Prime Minister asked. Whatever the hurdles, he emphasised that the PAP had always been open with Singaporeans, even when these trade-offs may be unpopular – SPH.

I got two gripes with the above remarks by PM.

Firstly, as usual he is framing* the issues in such a way so as to try to get us to answer the way he wants us to answer them. Dad used to do this successfully when we didn’t have the best education system in the world, when issues were less complicated, and when there wasn’t the internet. But times have changed, but PM hasn’t shaken off daddy’s influence.

– “Do you want faster growth or do you want fewer foreign workers?” Well how about asking, “How can we have faster growth without FTs? Can we substitute robots, or pay higher wages?” And more fundamentally what about, “Do we need faster growth? What about better quality growth?”

– “Do you want more hard work or more leisure?” What about asking,”Can we work smarter to have more leisure?” Or more fundamentally, “Are we working smart? Or are we working harder because we are not working smart?”

– “Do you want more competitive schools and good results and good futures, or more relaxed schools and fall behind?” Shouldn’t we be asking, “Are there other ways of educating S’poreans that ensure national prosperity and self-development?”

Now the answers to these alternative questions may well be those that the PM thinks are the solutions to the problems that we face. Fair enough, then. But let’s ask alternative questions, think thru the answers, and also think blue sky. The great and the good don’t always have the answers. Even Bill Gates got Google wrong, badly wrong http://dealbook.nytimes.com/2013/01/21/prophesies-made-in-davos-dont-always-come-true/

And lest the PM forget, the PAP has not always been open with us.

The FTs came pouring in on the quiet. The government was not open on this issue, public housing and transport, and inflation.

Mah Bow Tan was telling us that his HDB building programme was sufficient when S’poreans were saying it was insufficient. Well fact that Khaw has accelerated and expanded the building programme shows that Mah was wrong, if not in denial.

And remember Raymond Lim said GST had to rise when we bitched about overcrowded trainds and buses: he implied that we juz wanted more comfort and so should pay for it. He was wrong or in denial about the problem. Well the massive spending plans, shows that we were right to get upset.

And inflation. I’ve gone on and on about Tharman and Hng Kiang saying that higher inflation doesn’t affect S’poreans who don’t buy cars. That is obfuscation, not openness.

But never mind, the PAP can remain complacent because Low has publicly implied that a vote for the WP is a vote for continued PAP rule.

Not that I’ll complain too much. The low-tax environment and the emphasis on making sure property prices “cheong all the way” have allowed me to stop working in my 40s. And have the time to think; and grumble, constructively, I hope.

And oh, keep on spending our money on ourselves. And double it, or triple it. Better return on investment for the PAP, then letting Temasek lose it like in here http://www.breakingviews.com/tpg-runs-rings-around-li-ning-shareholders/21064940.article. And anyway, , potential returns for investors are not going to be that great anyway http://www.economist.com/blogs/buttonwood/2013/01/investing. So it’s a better investment for us and the PAP: make life more comfortable for us using our money.

*Read this on the science of framing questions, to get the “right” answers http://www.bbc.co.uk/news/uk-scotland-20512743

Olam: Snake confuses mongoose

In Commodities, Corporate governance, Temasek on 04/12/2012 at 5:58 am

Olam proposed an underwritten rights issue of US$750m in principal amount of 6.75% bonds due in 2018, along with 387.4 million free detachable warrants. The issue price of the bonds will be 95% of the principal amount and the gross proceeds from the issue of the bonds are US$712.5 million. Terms of bond are generous.

Olam said the transaction was fully backed by  Temasek which owns a 16% stake in the company. Temasek’s commitment “is a very strong, decisive action (for investors) not to have any worries about any of the allegations,” Olam’s CEO said.

The issue is underwritten by four major bank creditors: Credit Suisse, DBS, HSBC and JP Morgan. Again another sign of confidence.

So Temasek and the banks are onside. Goes without saying that the Indian conglomerate controlling Olam will subscribe for its share: It would, wouldn’t it?

And the shortists will have to cover their positions as investors recall their shares to make sure they get their rights.

Yr move, mongoose.

PS (at 8.50am): Gd counter by snake (must be King Cobra) to offer to pay for credit rating. Ang Moh Kaws must never underestimate Indians.

Update (1.15pm)

Shares of Olam climb more than 8%

Olam: Temasek’s actions key

In Commodities, Temasek on 20/11/2012 at 1:45 pm

Olam fights back.

As Temasek is the second largest shareholder, will be interesting to see what it does. If it doesn’t buy Olam shares, Olam will remain under a lot of pressure. If it does buy, TRE, TOC readers and other cowboys (esp from Facebook) will be mindlessly attacking Temasek, juz because ang moh says Olam shares are a short.

 

 

StanChart not looking too gd

In Banks, Temasek on 15/11/2012 at 6:33 am

Standard Chartered graphic
“Analysts at Barclays recently highlighted concern over StanChart’s bad debt trends, evident in a 42 per cent increase in loan impairments in the first half of the year, compared with pre-tax profit growth of only 9 per cent,” reports FT. The growth is fastest since 2002.

So as StanChart still trades at a 25% to HSBC (1.5x book value versus 1.2X), this may account for the stories that Temasek wants out of its stake.

Waz pt of scholar, ex-general, ex-Temasek MD as NOL’s CEO?

In Media, Shipping, Temasek on 01/11/2012 at 5:48 am

When NOL is listed as the least preferred Asian container line?

When NOL annced its turnaround last week and a sale of its building, I tot “Waz wrong?”: boast turnaround yet indulge in financial engr for short term gain. Didn’t have to wait long to find out.

This is what BT, part of the constructive nation-building, 30-pieces-of -silver(?) SPH wrote earlier this week 

NEPTUNE Orient Lines has disappointed some analysts with its third-quarter numbers even though it fought its way into the black with US$50 million in net profit, its first after six consecutive quarters of losses.

NOL, which owns the world’s seventh largest container line APL, fell 2.5 cents yesterday to end at $1.145.

“It underperformed just about everyone’s expectations. I’m not sure if people were expecting profit of that magnitude when the street’s view was about US$150 million,” said Timothy Ross, Credit Suisse head of transport research, Asia-Pacific. NOL is now among the least-preferred counters among Credit Suisse’s basket of seven Asian container companies.

Joining Credit Suisse in a dimmer view of NOL was CIMB, which downgraded NOL to “underperform” from “neutral”.

The problem with comparisons as distinct from Hard Truths (like Scholar is “betterest” for anything) is that they are so inconvenient that shumetimes the constructive, nation-building media must report them. Even thouh, ST has made him out to be a genius on par with the North Korean leaders who advise experts on how to do their work, BT had to report the facts saw them.

Hope this ex-general and Temasek MD doesn’t run NOL aground! The gd thing abt NOL is that it is lightly ge as the analysts sred, unlike other container lines. FTR, I got few lots. Better yield than FD.

But there are times when having scholars in senior posts helps. NSP used to hibernate between general elections. With two scholars on the executive commitee (Hazel and hubbie), NSP has decided not to indulge in its usual hibernation. It is actively walking the ground, and is finally planning a mone online. More next week.  

Related post

http://atans1.wordpress.com/2012/08/16/maersk-sails-to-profit-while-nol-loses-another-mast/

Reasons why Cina banks deserve their deratings

In Banks, Temasek on 31/10/2012 at 10:18 am

 http://blogs.reuters.com/breakingviews/2012/10/30/three-reasons-chinas-banks-deserve-their-derating/

For the record, Temasek has big stakes in three of the four biggest banks. Cheong all the way?

StanChart: Troubles never come singlely

In Banks, Indonesia, Temasek on 02/10/2012 at 6:44 am

The British bank where Temasek has a controlling stake of 19%, which agreed in August to pay the New York state’s top banking regulator US$340 million to settle money-laundering allegations (and in the process making a PAP apologist look even more stupid: he attacked the NY regulator as a “rogue prosecutor”), may be at risk of losing money on a US$1 billion loan to an Indonesian tycoon to buy shares in an Indon mining company*controlled by the family of an indon presidential candidate. He bought the shares at abt 11 sterling last yr. Now under 150 pence.

http://dealbook.nytimes.com/2012/09/27/standard-chartered-next-worry-a-1-billion-indonesian-loan/?nl=business&emc=edit_dlbkam_20120928

In the 70s and 80s, StanChart was the go-to bank for goofs but in the 1990s and noughties (aside from employing one TJS) it gained a reputation as a bank that didn’t do silly things: not anymore.

So far in the scheme of things, the losses are “peanuts”. Let’s hope there is no mega encore.

—–

*Related post: http://atans1.wordpress.com/2012/09/25/indonesia-even-friends-get-screwed/

Gd news for Temasek on Chesapeake

In Energy, Financial competency, Temasek on 13/09/2012 at 7:18 am

This investment has been problematic for Temasek http://atans1.wordpress.com/?s=Chesapeake

The shares closed at US$19.89. Temasek owns bonds that are convertible at US$27 (issued when stock was around 23-25).

It has many problems but the most pressing problem it spends more than it makes. It expects to spend roughly US$14bn on capital expenditure, acquisitions, interest, dividends and taxes this year, against about US$3bn in operating cash flow.
 
So it has to sell.  This year, the company has reached agreements to sell US$11.6 bn worth of properties (including the ones reported below). It is aiming to raise a total of about US$13 bn to US$14 bn. S’poreans can only hope it succeeds.

The Chesapeake Energy Corporation said on Wednesday that it had agreed to a series of asset sales (US$6.9bn) as part of an effort to reduce its considerable debt burden.

Long term investor while trading a stock

In China, Financial competency, Temasek on 04/09/2012 at 7:00 am

Jim Cramer’s “trading round a position”. Got to try it. Locks in profits.

http://www.cnbc.com/id/48614527?__source=ft&par=ft

Maybe Temasek is trading round its position in the Chinese banks it holds, given that China will not be pleased if it sells out of them. http://atans1.wordpress.com/2012/05/03/temasek-rebalancing-its-chinese-bank-portfolio/

StanChart: A buy for the bold & canny?

In Temasek on 13/08/2012 at 6:28 am

Looks like Jewish-American NY regulator is a “rogue regulator” in it for the publicity (new boy in town) or to shake down StanChart for US$700m.

Meanwhile some combination of a massive fine (say US$1.5bn),  mgt changes (both looking unlikely as is the  loss of US licence) or Temasek doesn’t want to be on the wrong side of the allegations and wants out (unlikely too), someone like JP Morgan or BoA who covets StanChart’s trade financing biz in Asia and other emerging markets might bid http://www.breakingviews.com/standard-chartered-selloff-has-gone-far-enough/21034299.article

Anyway it is cheap. Trading at about 1.17x book (HSBC trades at 1x book) even after its recovery. It usually trades usually at 1.3x book.

Hurry, hurry before the discount disappears. Buying at this level gives exposure to S’pore and HK where banks trade at around 1.3x book), and Msia and Indonesia (where banks trade at around 2x book minimum) at a discount.

StanChart in v.v. serious trouble

In Corporate governance, Temasek on 07/08/2012 at 5:51 am

Opps spoke to soon abt StanChart http://atans1.wordpress.com/2012/08/04/wheres-the-cheers-for-temasek/ According to the FT, it could lose its NY licence. Price fell 6% on the news. Wonder if our MSM will report this?

Standard Chartered Accused of Hiding Iranian Transfers Calling the British bank a “rogue institution,” New York State’s financial regulator has accused Standard Chartered of enabling Iranian businesses to hide illegally more than $250 billion in transactions, Jessica Silver-Greenberg reports.

Where’s the cheers for Temasek?

In Temasek on 04/08/2012 at 3:20 pm

It got 19% of StanChart in its portfolio.

Bucking the industry trend of weak earnings, the British bank Standard Chartered reported on Wednesday that its net income rose 11.3 percent in the first half of the year on strength in Asia and other emerging markets.

While many of its peers, like Deutsche Bank and Barclays, are scaling back their operations after the global financial crisis, Standard Chartered said it planned to increase its presence in Asia, Africa and the Middle East …

… said that it would open more branches in countries with fast-growing economies, like China and India, and that it was looking to exploit the decrease in its competitors’ trading activity.

http://dealbook.nytimes.com/2012/08/01/standard-chartered-profit-rises-11-in-first-half/?nl=business&emc=edit_dlbkpm_20120801

Third time lucky, Temasek?

In Banks, Temasek on 22/07/2012 at 5:10 am

But if investment is another Merrill Lynch or Barclays or like GIC’s UBS nightmare, amount lost will be “peanuts”. Still.

Credit Suisse initiated a series of measures on July 18 to boost its capital position, including a 3.8 billion Swiss franc issue of mandatory convertible securities to new and existing investors.

The securities will pay an annual coupon of 4% until they convert into 234 million ordinary shares in March 2013. Half the issue will be taken up by strategic investors including Qatar Holding, Saudi Arabia’s Olayan Group, BlackRock Investment, Capital Research Global Investors, Norway’s Norges Bank and Temasek. Some of the strategic investors have also underwritten the other half of the issue, which will be offered to existing Credit Suisse shareholders.

http://www.breakingviews.com/sovereign-funds-still-hungry-for-western-banks/21030574.article

Related posts

Estimate of Temasek’s losses on ML and Barclays

http://atans1.wordpress.com/2010/08/04/swee-say-said-that-gd-temasek-lost-billions/

Estimate of GIC’s loss on UBS:

http://atans1.wordpress.com/2011/07/26/gic-not-reported-in-st-cna-or-today/

Temasek’s cautious in India while PM’s bullish

In India, Temasek on 16/07/2012 at 9:46 am

So “Prime Minister Lee Hsien Loong said Singapore is prepared to share its experience in building industrial parks with India … Mr Lee believes there is potential for building such parks in India, following Singapore’s experience with such parks in countries like Indonesia and Vietnam … Singapore has been talking to several states in India about such projects … acknowledged that it would take some time, as land has to be acquired and approval has to be obtained. Support from the state government is also needed … if these hurdles can be cleared, Singapore will be able to build the parks faster and contribute to India in a strategic direction [such parks can help to boost the manufacturing sector in India which he says India needs. India also needs a substantial amount of manufacturing investments he claims] … the Indian economy is at a stage where it needs a considerable amount of investments, especially in infrastructure. Singapore companies have capabilities to handle some of these projects.”

But despite his bullishness (see here for the CNA report), Rohit Sipahimalani, co-chief investment officer of Temasek, told The Economic Times: “There’s a lot of uncertainty, but times like these also create opportunities. We will take advantage of the uncertainty, but will remain cautious.”

Can’t blame Temasek, given things like this in India  http://www.reuters.com/article/2012/05/18/india-buyout-idUSL4E8G318Y20120518

Why Lord Rothschild is focusing on US

In Energy, Temasek on 10/07/2012 at 6:50 am

Recently Lord Rothschild, a 70-something deal-maker and shrewd investor, teamed up with the Rockefeller* family office. He said the US was the place to invest in because of its growing oil production. The two charts in this link explains what he means.

Well Temasek is buying into North America, though its flagship investment is one dog with fleas http://atans1.wordpress.com/2012/05/27/temasek-the-gd-the-bad-and-the-ugly/

Interestingly Lord Rothschild, unlike Temasek, has no plans to invest in Europe. BTW, he has a palace on the Greek island of Corfu. Time to buy the island?

—-

*The first rich Rockeffer made his fortune in oil refining and distribution.

Europe: Temasek has competition

In China, Temasek on 03/07/2012 at 7:42 am

(Updated on 5 July 2012 : forgot to mention ex-UBSer appt)

Sometime back, the new CIO said that Temasek is looking for investment opportunities in Europe.  He said turmoil in Europe may result in a market slump rivaling the 2008 global financial crisis creating opportunities for Temasek to make deals. Earlier this year, Temasek hired former UBS Chief Financial Officer John Cryan to oversee its strategy for Europe, whereit has limited exposure. The hiring of Cryan had raised speculation that Temasek is eyeing distressed assets in the euro zone, shumething that the CIO has confirmed.

It had better hurry.

The total value of mergers and acquisitions in Europe by foreign companies has reached US$101 billion, well ahead of the combined US$73 billion spent in the United States by international acquirers, according to the data provider Dealogic http://dealbook.nytimes.com/2012/06/20/amid-debt-crisis-overseas-buyers-seek-european-companies/?nl=business&emc=edit_dlbkam_20120621.

The Chinese even have a fund to co-invest with Chinese cos wanting to buy European coms for their technology or brands. Not juz but investment returns or financial egineering, unlike Temasek. Maybe our leaders should “sit down and shut up” when it comes to advising China to follow them? And observe what the Chinese are doing?

Hopefully, Temasek will remember that it bot Barclays and Merrill Lynch, and GIC bot UBS and Citi a bit too early in the 2008 cycle, to be precise in 2007. Temasek sold its dogs in 2009, juz went markets were recovering, losing billions. Given the losses, Temasek will hopefully be more cautious, even if it means losing some great bargains. Catching a falling knife will not amuse S’poreans, the “owners of Temasek” (Ho Ching once called us).

As to why it needs to do deals: investment returns are likely to have without some good deal http://www.businessweek.com/news/2012-06-21/temasek-expects-smaller-returns-amid-difficult-years-curl-says.

Related post: http://atans1.wordpress.com/2012/02/26/our-swfs-owned-four-out-the10-biggest-investment-flops-of-the-last-10-yrs/

Temasek investment divesting assets as shareholders revolt

In Corporate governance, Energy, Temasek on 11/06/2012 at 7:18 pm

http://dealbook.nytimes.com/2012/06/08/chesapeake-to-sell-midstream-assets-for-4-billion/?nl=business&emc=edit_dlbkpm_20120608

Background on this investment: “bad” http://atans1.wordpress.com/2012/05/27/temasek-the-gd-the-bad-and-the-ugly/

Why our local banks shld stop wasting resources on China proper

In Banks, China, Investment banking, Temasek on 07/06/2012 at 5:14 am

(Or “Why Temasek’s big bet on Chinese banks makes sense“)

DBS is the 6th largest foreign bank in China proper. It has a strategy of expansion into China. So have UOB and OCBC.

Well, its a tough biz to be in. Non-Chinese banks have only 2% market share. Even HSBC, StanChart and Citi have problems http://www.bloomberg.com/news/2012-06-04/china-wall-hit-by-global-banks-with-2-market-share.html

DBS, OCBC and UOB shld juz not bother abt China.

Indonesia does DBS shareholders a favour

In Banks, Indonesia, Temasek on 01/06/2012 at 2:38 pm

By planning to allow financial institutions a maximum of 40% in an Indon bank (applicable only to new investors), the Indon central bank has blocked Temasek’s plan to sell its 67% stake in Bank Danamon to DBS Bank where it has a controlling stake.

On a day when banks (and other blue chips) are weak in local trading (UOB -1.5% and OCBC -0.5%) fact that DBS is only -o.6% shows that investors are not upset over the failure of the deal.

One reason is that institutional investors don’t like big “strategic” deals by their investments because they usually overpay and are prone to destroy shareholder value. Here while the price is decent, the issue of lots of new shares to Temasek is dilutive to earnings.

Ah well back to the drawing board DBS mgt to find a new driver for growth. Same too for Temasek’s financial enginners. The deal would have reduced Temasek’s direct exposure to Indonesia while increasing its exposure to DBS.

Temasek: the gd, the bad and the ugly

In Energy, Temasek on 27/05/2012 at 9:27 am

Ang  moh financial commentator says nice things abt Temasek (Bang yr balls SDP, Chris Balding, KennethJ and TRE. I hope TRE reflects that its heloo TJS has never said the nasty things that the others have said abt our SWFs. In fact by saying that S$60bn is “small change”, he implies that they are doing a gd job. But how would he know? He was in the loop over 20 years ago.)

http://blogs.reuters.com/breakingviews/2012/05/09/temaseks-triple-personality-bodes-well-for-returns/

As I said yesterday, our SWFs didn’t do extractive industries presumably because one LKY didn’t understand “miners”, he said a few yrs ago. Gd advice: given this (credit downgrade) a few weeks ago;  and this (billionaire stalker of underperforming US cos) revealed yesterday that he had bought a 7.6% stake in Chesapeake Energy Corp and called for the natural gas producer to replace at least four directors, saying the board has failed “in a dramatic fashion” in its oversight of management).

The background and details on Temasek’s stake: http://www.tremeritus.com/2012/04/29/temasek-flops-again/

Maybe, balls-up like this resulted in Temasek last week naming Boon Sim, former global head of mergers and acquisitions at Credit Suisse Group AG, as its president for North America. He will also work closely with teams to support its interests in Latin America and Europe.

Temasek … said it expects the markets to enter a “period of stress” for the next one to two years amid the European debt crisis, adding risks to investments http://www.bloomberg.com/news/2012-05-22/temasek-says-markets-entering-period-of-stress-in-next-2-years.html.

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