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Archive for the ‘Temasek’ Category

StanChart: Ho, Ho, Ho on a wing and a prayer

In Banks, Emerging markets, Temasek on 20/05/2015 at 1:21 pm

Last yr when Temasek gave a media presentation on its results, the question on StanChart elicited a BS reply but which when viewed today tells a lot about Temasek’s strategy in dealing with dogs with fleas: “Everything will be alright in the long term”. Err remember Keynes said in the long run, we are all dead.

QUESTION: Could you give us some comments on how do you see StanChart performing in your portfolio because over the last few years, especially in the last year and a half and looking at the outlook as well, they seem to be finding it quite challenging and there was a profit warning as well. What is your plan for StanChart? Do you think that… is that something that you would like to exit in the long term or you would treat StanChart as another Olam where you could actually try to take over?

RS: So look, it’s obviously not fair for us to comment on individual companies but all I would say is that yes, a lot of our stocks go through volatility. Standard Chartered is an emerging markets bank and like all emerging markets banks, the stock over the last year has been quite volatile. We, however, see ourselves as long term investors, short term volatility doesn’t concern us. We look at our investments over a longer term and use our value test to decide whether what we do with those stocks and we remain as an active investor always engaged with the companies.

S’poreans hanna do NS for China: Ho Ho Ho

In Banks, China, Temasek on 18/05/2015 at 2:05 pm

We (or rather Temask but then even Ho Ching has said Temasek’s money is our money, something Roy and his fellow cybernuts pretend she never said) have a big bet on Chinese banks.

And recently I reported some bad news: https://atans1.wordpress.com/2015/05/03/temaseks-china-banks-strong-headwinds-2/

More bad news:

Chinese policymakers have ordered banks to keep lending to local government projects under construction, in a sign of concern that a crackdown on shadow financing has reduced municipalities’ spending and is hurting the economy.

Financial institutions which signed legally binding contracts before the end of 2014 to loan to money to construction projects backed by local government financing vehicles (LGFVs) must not stop lending or reduce the loan size, a document posted on the State Council website Friday said.

“It is necessary to support the financing needs of LGFV projects under construction and ensure an orderly continuation,” the regulators said in the document.

“This will help meet reasonable funding demand of the real economy, as well as effectively prevent and resolve fiscal and financial risk.”

http://www.reuters.com/article/2015/05/15/us-china-debt-lgfv-idUSKBN0O00JM20150515

NOL versus Maersk: What can I say?

In Shipping, Temasek on 15/05/2015 at 7:12 am

Maersk LIne the world’s largest container shipping business reported a jump in net profit to $714 million from $454 million, due largely to lower bunker fuel prices

http://www.reuters.com/article/2015/05/13/maersk-results-idUSL5N0Y41JZ20150513

Singapore-based container shipping firm Neptune Orient Lines Ltd said on Thursday its first-quarter net loss narrowed to USD$11 million (S$14.5 million) from $89 million a year earlier, aided by cost savings and lower fuel cost.

NOL reported revenue for the three months ended March 31 at $2 billion, down 13 per cent on the year, though it posted $30 million in core earnings before interest, taxes and non-recurring items, compared with a $65 million loss a year earlier.

– See more at: http://business.asiaone.com/news/singapores-nol-q1-net-loss-narrows-cost-savings-lower-fuel-cost#sthash.HFQwt8Y4.dpuf

The performance of NOL’s CEO (scholar, SAF general, Temasek MD) tells the truth about “intelligence” PAP style: it doesn’t work in the real world, only in S’pore.

Temasek: If only chose Apple, not StanChart

In Banks, China, Temasek on 04/05/2015 at 1:48 pm

The big concentration on financials is to play the rising Asian middle class theme. A lot of the exposure goes into China banks (not looking good going forward) and StanChart.

Err should have juz bot Apple leh? Look at its price since 2005 when Jobs returned https://sg.finance.yahoo.com/q/bc?s=AAPL&t=my&l=on&z=l&q=l&c= Ho Ching became CEO of Temasek in 2004, and Temasek started buying StanChart in 2006. She should have bot Apple.

Here’s why based on her thinking of riding the expansion of the Asian middle class (Not Italic bits below are my tots, snide comments).

What do two big American and European multinational corporations have in common? Not much on the surface when comparing consumer giant Apple to the FTSE-listed Standard Chartered bank.

However, both have been significantly affected by emerging markets in their first-quarter earnings. And how they’ve been affected is revealing of the way emerging economies have matured, particularly in Asia.

The emerging markets-focused bank, Standard Chartered, reported a big fall in pre-tax profits of more than one-fifth in the first quarter (22% to $1.47bn) as revenues fell by 4% and costs rose by 1%.

By contrast, Apple had a strong quarter where revenues rose by 27% to $58bn, driven by a 40% increase in sales of iPhones. More than 61 million were sold globally, and notably, the biggest market was China for the first time and no longer the US. [Demand from China’s middle classes, iPhone sales leapt 40% to 61.2m units.]

But iPad sales fell sharply by 29%, reflecting a weak spot in their figures. [Apple fixing this introducing new model for Jap aging market. If works in Jap, another big global winner.]

So, it’s a really tale of two emerging markets. [Ho, Ho, Ho]

One side of emerging economies is a concern over their slowdown in growth, which raises risks over loan repayments, not just in Asia but also commodity exporters in Africa and the Middle East.

These are Standard Chartered’s key markets. Indeed, Standard Chartered took a $476m charge on bad loans, which is 80% higher than the first quarter of last year, although loan impairments were lower than in the previous six months.

[Ho, Ho, Ho]

However, there’s also the consumer side of emerging markets to consider.

For Apple, China’s rapidly growing middle class generated an impressive 72% increase in sales of iPhones. And Greater China has even overtaken Europe to become Apple’s second largest market for the first time with revenues rising by 71% in that region to $16.8bn, which accounts for much of Apple’s strong performance. Net profit was a third higher at $13.6bn for the quarter.

So, as emerging markets, particularly in Asia, become middle income countries, companies that sell to those emerging consumers are well-positioned to benefit.

But the period of rapid economic growth, particularly via debt-heavy investment, of key emerging markets is seemingly over. And companies, particularly banks, are liable to struggle as those economies restructure toward being increasingly driven by consumption.

[Ho Ho Ho: so waz Temasek doing to get into the consumption plays? Olam? Asians eating more peanuts?]

http://www.bbc.com/news/business-32495200

My serious point that by focusing so much on financial services (30% of portfolio and not on consumer plays (outside of the Telecoms, Media & Technology sector: 24%), Temasek has for the last few years been betting on a three-legged horse. Other consumer plays are only a subset of Life Sciences, Consumer & Real Estate: 14%)

Temasek’s China banks: Strong headwinds

In Banks, China, Temasek on 03/05/2015 at 4:36 am

Temasek has stakes in three of the five major Chinese banks. See details here http://temasekreview.com.sg/en/major-investments/financial-services.html

An FT working for Reuters recently wrote

The biggest five banks reported a miserable sub-2 percent increase in earnings for the quarter, year on year. Two rate cuts have pressured their lending rates, and fees from other lines of business have slowed. A bigger drag is borrowers who can’t or won’t pay up. While bad debt levels are still low, charges for credit that hasn’t yet gone bad but might are leaping. These items increased by 73 percent year on year at China Minsheng Bank, and more than 50 percent at Agricultural Bank and Industrial Bank of China.

The valuations of big banks like ICBC, China Construction Bank and Bank of China are also burdened by the lenders’ role in big government schemes that are still not properly sketched out. Take the plan to reform local government finances by swapping some of the estimated 16 trillion yuan ($2.6 trillion) borrowed by regional authorities into new bonds. The new securities could leave banks holding the same credit risk in a different form, at deceptively low rates of interest.

China’s ambitions for global greatness also raises questions. Plans to roll out infrastructure under the clunkily named “one belt, one road” strategy are likely to involve hefty lending commitments. That may bring glory, but also pressure on banks to lend to projects that may take years to generate cash flows. In the meantime, if growth slows more at home, further rate cuts will add pressure to lenders’ margins.

http://blogs.reuters.com/breakingviews/2015/04/30/banks-are-designated-drivers-at-china-market-party/

Below is a Q&A from reported on Temasek’s website. It was asked, last yr,  at a media conference on Temasek’s 2014 Review

QUESTION: Can you confirm if the Chinese banks are the major drag on your relative underperformance last year and then what are your views and plans for them? Thanks.

WYB: The banking stock has been volatile. I would not say the Chinese banks are the major drag on our performance. They do fluctuate from time to time. Chinese economy – we remain very optimistic over the long term. The financial institutions we believe have ample capability to weather the current storm and be able to adjust to the risks they’re facing. So, we remain comfortable with our stakes and we will continue to invest in the financial institutions because they are good proxy for the long term growth for Chinese economy.

RS: If I could just add to that, as you would have seen in our presentation, we had mentioned that about half our portfolio consists of listed stocks in Singapore and stocks that are listed on the H-share in Hong Kong and you saw even the Straits Times Index over the last year had negative returns, so it was not any one set of stocks, it’s just that some of the areas that we had invested in had weak market performance. And again, you know, these are results as of a particular date, March 31st. You mentioned the Chinese banks. Since March 31st, they rebounded by 10 to 12% or even if you look at the Straits Times Index, that’s up about 4%. So, you know, we really look at long term returns and look at investments over the long term horizon and are fairly comfortable with short term market volatility.

Govt sees StanChart as risky?/ LKY’s 30-year investments revisited

In China, Hong Kong, Temasek on 28/04/2015 at 4:42 am

The Hong Kong Monetary Authority says that it “takes a positive attitude should HSBC consider relocating its headquarters back to Hong Kong”, where it is the largest bank.

HSBC WEIGHS MOVE FROM LONDON HSBC was established in Hong Kong 150 years ago and moved its headquarters to London in 1993. Now it is considering a return trip. Citing changes in regulation, HSBC says it will study whether to relocate its headquarters out of London, reports Chad Bray in DealBook.

A big part of the issue is Britain’s bank levy, which was instituted in 2010 to help pay for the government’s financial crisis bailouts. While all banks operating in Britain pay the tax, Mr. Bray writes that “The levy hits British-based banks particularly hard, however, as they are taxed on their global balance sheets.” HSBC’s announcement could become a political issue as Britain nears a general election on May 7.

(NYT’s Dealbook)

Hongkong Bank is a HK quitter. It moved to UK in 1993, juz before PRC regained HK in 1997. But all is forgiven.

Both HK have S’pore have similar sized economies (about US$300bn in GDP).

HK is willing to be lender-of-last-resort to HSBC a bank with US$2,6 trillion in assets, despite HSBC being almost 9 times bigger than HK’s GDP.

Yet the S’pore authorities, it’s clear from hints in the FT, are unwilling to have StanChart HQed here (only 1.1 trillion in assets), despite Temasek being the largest single shareholder (which will benefit from reduced tax: HSBC shares were up 6% in HK yesterday), and despite many of StanChart’s operations being run from here.

The PAP administration is afraid of another of Temasek’s investments blowing up? After all StanChart is not as safe as our local banks: https://atans1.wordpress.com/2015/03/25/stanchart-not-as-solid-as-local-banks/

It also has weaker capital ratios than HSBC and the big US banks. So weak that the new CEO is expected to call for yet another massive rights issue.

Remember LKY and his bank investments that are forever? OK 30 yrs leh) Even longer than Buffett’s investments, he once said

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 realised losses on ML and Barclays:

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

— Estimate of GIC’s loss on UBS as at 2011:

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

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

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

 

 

 

Temasek bidding for China’s POSB?

In Banks, China, Temasek on 27/04/2015 at 11:33 am

Bidders Seen for Stake in Postal Savings Bank of China UBS, BNP Paribas and Temasek of Singapore are said to be among the preliminary bidders seeking to buy 10 percent of Postal Savings Bank of China ahead of an expected initial public offering next year that could raise $25 billion.

NYT Dealbook

Ho Ching has a problem; so have our local banks

In Banks, China, Temasek on 09/04/2015 at 6:54 am

As readers will know Ho Ching has big markers on StanChart and Chinese banks.

Once regarded as a proxy for the growth of Asian markets in commodity-rich nations like Indonesia, StanChart has today become a victim of the reversal of fortune suffered by many emerging markets and their heavily indebted corporate borrowers …

Much of the lending to Asia outside of China assumed the region would grow on the back of insatiable demand from China. Much of the lending to China itself was based on that same expectation. That faulty thinking was then compounded by assuming that the value of the Chinese property used to back the loans would also continue to rise. But local banks in China, such as Agricultural Bank of China, are beginning to report that their bad loans have doubled — although officially they remain under 3 per cent. (Excerpt from recent FT article)

Ho Ho HO.

But it’s our problem too now that Tharman is now using projected long term returns from Temasek to spend our money on ourselves. Cybernuts might want to note that their heloo, Ong Teng Cheong, wanted to lock-up all the returns from the reserves (more LKY and Dr Goh). It was Ah Loong that fought him. Ah loong is the real people’s hero. if Ong had his way, we’d be pressing our noses on the iron bars guarding our reserves: Money, money everywhere/ Not a cent to spend/ Give thanks to Ong Teng Cheong

But the pix’s not that great for our local banks either: what with DBS’s exposure to Greater China and Indonesia, OCBC’s exposure to Greater China, and UOB’s and OCBC’s exposure to M’sia. Btw, OCBC has FTs as its Chairman and CEO, while DBS and UOB have true blue S’porans (Yes, I’m counting Gupta as a local. He’s a real talent.)

And if property prices tank here …

Serious instability at StanChart?

In Banks, Temasek, Uncategorized on 06/04/2015 at 1:42 pm

Following the coming change in CEOs, the resignation of a very senior manager and a planned change of chairman, Viswanathan Shankar (new citizen and a real talent like DBS’s Gupta), head of the bank’s Europe, Middle East, Africa and Americas business, is said to be planning to start a private equity fund. The bank it seems wanted to give him additional responsibilities. This not not good as the deputy CEO (passed over for the job) is also expected to leave.

Temasek and other major shareholders wanted change. May be they’ll end up with serious instability.

World class banks, “peanuts” salaries

In China, Corporate governance, Temasek on 03/04/2015 at 5:00 am

China banks’ CEOs are monkeys? Temasek has significant stakes in three of them.

 

 

Exhibits from FT

 

Lex chinese banks

StanChart: Broker Upgrade to “Overwight”

In Banks, Temasek on 24/03/2015 at 1:45 pm

Yesterday, StanChart was the top performer in the FTSE 100, adding 7% thanks to JP Morgan upgrading its rating on the bank’s shares to “overweight” from “neutral”.in a note to clients.

Reits: Keep on holding

In Economy, Financial competency, Property, Reits, Temasek on 19/03/2015 at 7:24 am

Likewise stocks with sustainable, decent dividend yields like Temasek’s Fab 5

“The Fed rate projections have been significantly lowered over a three-year horizon. This points to a later lift-off,” FT quotes a BNP Paribas economist.

In simpler English:

“The Fed is in no rush,” said Ward McCarthy, chief US economist at Jefferies.

“At the current juncture, the timing of the liftoff is still indeterminate and will depend upon the inflation data. The policy statement eliminated the use of ‘patient’ in forward guidance, but the FOMC also described the new forward guidance as being “consistent” with the prior forward guidance.”

He added: “The word ‘patient’ was removed, but the meaning of patient remained.” (BBC)

Or as Reuters puts it:  The Federal Reserve on Wednesday moved a step closer to hiking rates for the first time since 2006, but downgraded its economic growth and inflation projections, signaling it is in no rush to push borrowing costs to more normal levels.

http://www.reuters.com/article/2015/03/18/us-usa-fed-idUSKBN0ME0D520150318

StandChart’s 3 new advisers to Financial Crime Panel

In Banks, Temasek, Uncategorized on 18/03/2015 at 11:13 am

The British bank added the former leaders of Interpol (a S’porean) and the Swift bank messaging network and a former counterterrorism adviser to President George W. Bush.

GIC, Temasek tie up with Superman? Roy will have shumething to say

In GIC, Telecoms, Temasek on 05/02/2015 at 2:09 pm

Sovereign Wealth Funds Said to Be in Talks to Back O2 Deal — Some of the world’s biggest sovereign wealth funds, including the China Investment Corporation, Singapore’s Temasek and G.I.C. and one of Qatar’s big government-sponsored vehicles, are said to be in talks to provide financial backing for Hutchison Whampoa’s $15 billion acquisition of Telefonica’s British mobile business, according to a report in the Telegraph that cited unidentified sources.

StanChart: Gay Portuguese in running to be CEO

In Banks, Corporate governance, Temasek on 03/02/2015 at 1:34 pm

The CEOs of Llyods and HSBC UK are reported to be hot favourites according to Bloomberg http://www.bloomberg.com/news/articles/2015-01-28/lloyds-hsbc-executives-seen-as-favored-for-stanchart-ceo-role. Both are Portuguese. And the latter is gayhttp://www.theguardian.com/business/2015/jan/18/hsbcs-antonio-simoes-says-being-gay-was-key-to-career-success .

Wespac’s CEO is also in the frame.

Another report says that our very own Gupta (FT turned new citizen) is also a possible candidate.

Given that StanChart is big in M’sia, Hk, India and Indonesia, and wants to be big in China, I somehow don’t think appointing a gay is on the cards

FT’s Lombard thinks that “ex-StanChart guy Alex Thursby” will get the nod.

Alex Thursby, who went on to run ANZ’s Asian businesses and is now the CEO of National Bank of Abu Dhabi. In his current role, he is trying to drive a bank that will become multinational by following trade within the emerging world – what he calls the West-East corridor. But when asked if this looks a lot like a StanChart model, he says: “I think this has similarities with the Standard Chartered of old. The Stanchart model has changed over the years since I was there, and whether it’s changed for better or worse is for others to make a judgment on.”

Thursby’s words are carefully chosen but he’s clearly referring to StanChart’s ventures into financial markets businesses that it used to leave to the pure-play investment banks. And it is notable that the financial markets business is the one that is causing the problems in the bank today; the warning today says that division is the “main challenge” facing the bank and that everything else is in line with expectations. The head of that business, Lenny Feder, is to take a 12 month sabbatical for personal reasons, the bank says, and will not return to that role afterwards.

The financial markets business in StanChart parlance includes some things that others might consider mainstream, like foreign exchange, but it also houses equities and commodities, among other things. Peter Sands, speaking about the reduced performance, said today that the business was being hit by falling volumes in rates, squeezed margins, regulatory changes, and the fact that less business is done in a low-rate environment.

None of which would have had much impact on the Standard Chartered model of old. Which raises a further question: perhaps this most storied and reliable of institutions should get back to doing what it’s good at. It might be boring. But it works.

http://www.forbes.com/sites/chriswright/2014/06/26/is-the-standard-chartered-model-broken/

It jus shuttered its cash equity biz, if you must know.

Change a’coming at StanChart

In Corporate governance, Hong Kong, Temasek, Uncategorized on 26/01/2015 at 3:07 pm

The Sunday Telegraph reported that Temasek and Aberdeen (between them they hold 30% of StanChart) had told chairman Sir John Peace that he must find a replacement for Mr Sands within months or stand down himself.

FT reports the bank is looking to replace Peter Sands this year and has hired a headhunter to look for a successor ASAP. It says that Temasek and Aberdeen hold him responsible for not responding fast enough to a reversal of StanChart’s fortunes.

Why we have so few world class GLCs

In Corporate governance, S'pore Inc, Temasek on 03/01/2015 at 5:39 am

We only have three, Keppel, SembCorp and SIA.

Here’s a possible reason from the letters page of the PAP’s bible, the Economist:

State-owned failings

* SIR – No long analysis is needed to understand why state-owned firms underperform (“State capitalism in the dock”, November 22nd). Two main mechanisms exist for accountability in modern society: market pressure and political control. State-owned firms fall between the two. They lack the degree of competition that private firms typically face but also do not have the direct political control that applies in conventional government.

Lack of accountability means lack of performance. Effectiveness is best secured by either keeping ventures with classic government agencies, instead of with state-owned firms, or by placing ventures in fully privatised companies with full market exposure, whichever best suits the activities in question. A bit of each is not enough, but instead creates a grey zone with grey results, which is what we see for state-owned firms.

Bent Flyvbjerg
Said Business School
University of Oxford

 

Double confirm StanChart’s rogue bank & PAP apologist is a fool

In Banks, Hong Kong, Temasek on 10/12/2014 at 11:10 am

Remember a “PAP is always right” man KPKBing when StanChart was charged that the reulator was a “rogue regulator”. StanChart then made the dean of LKY School look dumb, really dumb, by pleading guiltyy

Double confirm that StanChart is a rogue bank and the PAP apologist is a fool because now: The management of Standard Chartered is facing renewed pressure after being placed under fresh scrutiny by US regulators.

Two years after being fined more than £400m for breaching US sanctions towards Iran, the bank revealed that a two-year deferred prosecution agreement (DPA) that was imposed at the time was being extended for three years.

The US authorities are now investigating whether Standard Chartered breached its sanctions rules beyond 2007, the period when the previous offences for which the bank was penalised took place.

http://www.theguardian.com/business/2014/dec/10/standard-chartered-management-us-regulators-investigation-sanctions

Looks like Santa didn’t bring Ho a nice Christmas present, giving her a turd instead. Juz look at share price chart from FT. [Chart added at 11.30 am]

Standard Chartered share price

Big StanChart shareholder still likes stock

In Banks, Emerging markets, Temasek on 02/12/2014 at 4:17 pm

The second biggest shareholder in Standard Chartered (after Temasek with around 27%) is standing by the embattled Asia-focused bank, continuing to buy the stock and insisting that nothing is “fundamentally wrong” with the company.

Martin Gilbert, chief executive of Aberdeen Asset Management PLC, said that funds run by his company have been “buyers of the stock in a fairly modest way,” despite a series of profit warnings that have sent Standard Chartered’s share price down 33% this year.

“We do not think there is anything fundamentally wrong with the bank,” said Mr. Gilbert, during a call to discuss Aberdeen’s results. He said that revenue growth had slowed but added that he would prefer the bank’s existing management team, headed by chief executive Peter Sands, to “sort it out” rather than looking for a replacement: “They have to really get on with it, I would say, and have a look at the costs.”

Aberdeen owns 7% of the bank, according to Factset, and, as of Oct. 31 2014, that had not changed since last year. Some Aberdeen funds have “topped up” their positions this month however, according to an Aberdeen spokesman.

The value of Standard Chartered shares held by the emerging markets-focused fund manager slid from a peak of $5.1 billion in February last year to $2.6 billion in October, according to Factset data. Part of that was due to an 8% reduction in the size of Aberdeen’s stake at the end of last year, but most was due to the bank’s falling share price.

http://blogs.wsj.com/moneybeat/2014/12/01/aberdeen-asset-management-stands-by-embattled-standard-chartered/

Temasek is one of the shareholders pressing for a change of mgt, other reports claim.

 

StanChart credit rating downgraded! First time in 20 years!

In Banks, India, Indonesia, Temasek on 29/11/2014 at 10:20 am

But no need to panic or curse Temasek*: Standard & Poor’s says bank is going through times but it still among world’s most creditworthy commercial lenders.

http://www.theguardian.com/business/2014/nov/28/standard-chartered-credit-rating-downgraded

It has some big exposures to heavily indebted clients, such as India’s Ruia brothers, who control the Essar Group, and Indonesian billionaire Samin Tan.

Honest mistakes.

—-

But the facts won’t stop Philip Ang, TOC’s and TRE’s star analyst, from cursing and ranting: he’s so bad that in a piece on a GIC, London investment, he left out the rental yields out of his calculation because he said that the income was “peanuts” (my word, not his). Well commercial property yields are a gd 6%, and have been as high as 8% in some yrs recently.

 

Scholar, ex-general still cannot stop NOL from sinking

In Logistics, S'pore Inc, Shipping, Temasek on 25/11/2014 at 4:41 am

At the end of October, NOL announced: that losses continued in the third quarter with the company $23m in the red compared to a net profit of $20m a year earlier, hit by port congestion in Southern California.

“We see a slowdown in emerging markets, partly driven by a lower need for raw materials from China. Europe – it’s very slow growth, if any, at the moment, and there’s no reason to expect a big change here,” said Nils Andersen,Maersk’s chief executive.

Revenues for the third quarter were flat at $2.06bn. For the first nine months of 2014 NOL lost $174m, compared to a $61m profit in the same period last year that included a one time gain from the sale of its headquarters building.

NOL claimed cost savings of $290m so far this year but these had been “largely offset” by lower rates, lower volumes and increased costs for port congestion.

http://www.seatrade-global.com/news/americas/nol-stays-in-the-red-port-congestion-hits-liner-arm-apl.html

But about a week later, FT carried this report: Denmark’s largest company by sales reported better than expected profits in the third quarter and lifted its profit outlook for Maersk Line, its container shipping business.

Maersk has bucked the trend in a container shipping industry dogged by overcapacity, losses and weak demand. Thanks to aggressive cost cutting and lower use of fuel, Maersk Line is by far the most profitable container group.

Maersk Line estimates its operating margin, which was 8.2 per cent in the second quarter, was 8.5 percentage points higher than the average of its rivals.

It lifted it again in the third quarter, posting an operating margin of 10.5 per cent, and leading Maersk Line to boost its guidance for the year for net profits to more than $2bn compared with $1.5bn previously. Net profit in the third quarter rose by a quarter to $685m.

“The days of rapid growth in containerised trade are over. We have to be happy as an industry that we are still growing . . . But we can still make good business,” said Mr Andersen.

But Maersk is more than just a container shipping group as the conglomerate has sought to emphasise its other businesses in recent years including oil exploration and production, port terminals and drilling rigs.

….

AP Møller-Maersk lowered its forecast for growth in global trade as the owner of the world’s largest container shipping line said a slowdown in emerging markets and Europe was weighing on demand.

The Danish group, seen as a bellwether for global trade as it carries 15 per cent of all seaborne freight, said demand had slipped in the third quarter compared with the start of the year and was now expected to increase by 3-5 per cent this year, down from 4-5 per cent.

So having a scholar, ex-SAF general and ex Temasek MD hasn’t done any favours for NOL, or S’pore Inc. On his watch (to be fair in really bad weather, he crashed NOL onto the rocks. Still in charge despite that , he has repeadely failed to stop the water from coming in.

The red ink continues to flow with plans to sell its APL Logistics unit in a sale that could fetch at least US$1 billion (S$1.27 billion).

Btw, local broker calls NOL a buy: http://www.ihsmaritime360.com/article/15494/neptune-orient-lines-gets-buy-rating-on-cheap-valuation.

Below shows trade flows across the Pacific. Maersk btw is based in Denmark and its traditional strength is the Asia, Europe trade. But it still dominates global shipping.

 

http://www.economist.com/blogs/graphicdetail/2014/11/daily-chart-9

StanChart bosses apologise to shareholders

In Banks, Temasek on 13/11/2014 at 1:48 pm

Top bosses at Standard Chartered admitted the bank’s performance had been disappointing as they announced plans to close 100 branches in a $400m (£250m) cost-cutting drive to win back support from disgruntled investors.

The admission was made as the bank’s top management team began three days of presentations to investors, who have endured a 30% drop in share values. There are also concerns about whether the bank has enough capital.

At the start of the three-day presentation, the new finance director, Andy Halford, said: “We recognise our recent performance has been disappointing and are determined to get back on to a trajectory of sustainable, profitable growth, delivering returns above our cost of capital.”

http://www.theguardian.com/business/2014/nov/11/standard-chartered-bosses-bid-calm-investor-fears

PAP like StanChart not broken, just in for 10-year service?

In Political governance, Temasek on 10/11/2014 at 4:26 am

The chairman of StanChart said to 300 of the bank’s senior managers in Singapore last week, “We’re making changes. But all you have to do is go out in the field, go out into our markets, and you very quickly realise that it’s not broken. It just needs to go in for its 10-year service and we are in there for that 10-year service now … it’s a question of going through this difficult period, gritting our teeth”.

He said: “Humility is a very important word. It’s very important that we recognise we make mistakes”.

http://www.theguardian.com/business/2014/nov/07/standard-chartered-chairman-john-peace-bank-humility.

(And Chairman Sir John Peace was in Singapore last week insisting the bank is not ‘broken’. Three profit warnings say otherwise  http://www.theguardian.com/business/2014/nov/09/standard-chartereds-charm-offensive-may-not-save-sands)

Well the PAP has been making changes, gritting fangs and sheathing claws since 20111: spending more of our money to make life more comfortable for ourselves.

https://atans1.wordpress.com/2013/08/16/analysing-pms-coming-rally-speech/

https://atans1.wordpress.com/2013/10/04/trust-has-to-regained-pm/

But it doesn’t ever do humility (OK PM did apologise once during a 2011 GE rally speech, but hey he had an election to win). It won’t even admit that the PAP’s Hard Truths need servicing every now and then. It’s all a question of new blood to uphold Hard Truths.

Taz the impression I get after this

— “Today is the time to re-dedicate ourselves to the party and to Singapore. In the next 60 years, the path ahead will be different.”

— “One thing has not and will not change, that is the need for good leadership. The PAP commits to provide the leadership and serve Singaporeans better…The PAP will always be on Singapore and Singaporeans’ side.”

— “The PAP will always do its best for Singapore and Singaporeans.”

PM made these statement at the Victoria Concert Hall on 7 Nov in celebration of PAP’s 60th anniversary.Victoria Concert Hall was the venue because this was where the PAP launched way back in 21 November 1954, with its inaugural political meeting held there.

So because the PAP is not prepared to service its Hard Truths to see if they need throwing out, we are stuck with

—  a CPF annuity where the Standard Plan is lousy, really lousy https://atans1.wordpress.com/2014/08/17/will-pm-tonite-give-peace-of-mind-on-cpf-life-standard/

And where it’s our money but CPF Life solvency is our problem –https://atans1.wordpress.com/2014/08/17/will-pm-tonite-give-peace-of-mind-on-cpf-life-standard/

https://atans1.wordpress.com/2014/08/17/will-pm-tonite-give-peace-of-mind-on-cpf-life-standard/

— Medisave’s incentive to spend on medical insurance that may not be needed

https://atans1.wordpress.com/2014/07/08/daft-sinkies-dishonest-insc-agents-or-medisave-sucks/

— MediShield being probably not a value proposition

https://atans1.wordpress.com/2014/07/14/medishield-totful-tots-on-loss-ratio-to-determine-premiums/

— Medishield’s lifetime limit [This item added at 7.00am]

https://atans1.wordpress.com/2014/03/03/no-needed-three-fixes-to-show-the-pap-really-cares/

— immigration

https://atans1.wordpress.com/2013/02/15/population-white-paper-2030-will-resemble-1959/

The Hard Truths behind immigration:

— more people means better growth; and

— S’poreans are daft and lazy.

The Hard Truth behind the other difficulties S’poreans face listed above is that govt should not spend tax-payers money on “welfare”, only on toys for the military and govt running expenses (which includes ministers’ and civil servants salaries).

 

 

StanChart directors to push for chief’s succession plan

In Banks, China, Corporate governance, Emerging markets, Hong Kong, Temasek on 01/11/2014 at 11:06 am

Above is FT’s headline for today.

Ho, Aberdeen, Blackrock and L&G baring their fangs? TRE ranters and other anti-PAP paper activists, pls note that Temasek has been pushing for a succession plan for some time.

Standard Chartered data

But they can rejoice ’cause  sharesclosed at £9.39 on Friday – down from £18 less than two years ago.

They will be celebrating.

Related:

https://atans1.wordpress.com/2014/10/29/lousy-set-of-results-from-stanchart/

https://atans1.wordpress.com/2014/10/31/stanchart-gives-ho-more-problems/

 

StanChart gives Ho more problems

In Banks, China, Corporate governance, Hong Kong, Temasek on 31/10/2014 at 10:12 am

Is StanChart a rogue bank?

Standard Chartered Plc (STAN) fell for a fourth consecutive day in London after U.S. prosecutors reopened investigations to determine whether the bank, which entered into a deferred prosecution agreement in 2012, withheld evidence of Iran sanctions violations.

The U.S. Justice Department, Manhattan District Attorney Cyrus Vance Jr. and Benjamin Lawsky, superintendent of New York’s Department of Financial Services, are all reopening their original inquiries into the London-based lender to determine whether it intentionally withheld information from regulators before the 2012 settlements, according to two people briefed on the matter, who asked not to be identified because the probes are confidential.

http://www.bloomberg.com/news/2014-10-30/standard-chartered-bank-of-tokyo-said-getting-new-review.html

Temasek wants clear succession plan at stanChart

https://atans1.wordpress.com/2014/10/29/lousy-set-of-results-from-stanchart/

Lousy set of results from StanChart

In Banks, China, Corporate governance, Emerging markets, Hong Kong, Temasek on 29/10/2014 at 2:23 pm

Standard Chartered has announced a 16% fall in operating profit because of a restructuring of its South Korean business and an increase in bad loans.

The Asia-focused lender said pre-tax profits fell to $1.5bn (£930m) in the July-to-September quarter compared to the same period a year ago.

Standard Chartered also warned full-year earnings would fall because of weak trading activity.

http://www.bbc.com/news/business-29797961

FT reports that some of the major shareholders have been pressing for the CEO to be sacked if things don’t improve soon. It also reports that Temasek  is “pressing for a clear plan of succession”.

Standard Chartered data

 

 

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)

—-

*”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.

——

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.

—–

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/

 ————

*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 https://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.

————————————————————————————————————

*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

———-

*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)

https://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: https://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: https://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. https://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 https://atans1.wordpress.com/2013/07/06/asean-round-up-30/, https://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)

https://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:

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

— Estimate of GIC’s loss on UBS:

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

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

https://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.

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