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Archive for the ‘Temasek’ Category

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

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

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

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

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

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

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

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

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

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

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

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

Related post

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

Reasons why Cina banks deserve their deratings

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

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

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

StanChart: Troubles never come singlely

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

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

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

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

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

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

Gd news for Temasek on Chesapeake

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

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

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

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

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

Long term investor while trading a stock

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

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

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

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

StanChart: A buy for the bold & canny?

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

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

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

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

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

StanChart in v.v. serious trouble

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

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

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

Where’s the cheers for Temasek?

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

It got 19% of StanChart in its portfolio.

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

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

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

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

Third time lucky, Temasek?

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

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

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

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

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

Related posts

Estimate of Temasek’s losses on ML and Barclays

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/

Temasek’s cautious in India while PM’s bullish

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

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

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

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

Why Lord Rothschild is focusing on US

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

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

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

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

—-

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

Europe: Temasek has competition

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

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

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

It had better hurry.

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

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

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

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

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

Temasek investment divesting assets as shareholders revolt

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

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

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

Why our local banks shld stop wasting resources on China proper

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

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

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

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

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

Indonesia does DBS shareholders a favour

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

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

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

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

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

Temasek: the gd, the bad and the ugly

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

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

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

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

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

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

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

SMRT: Quiet re-nationalisation

In Infrastructure, Political governance, Temasek on 06/05/2012 at 7:34 pm

(Or “SMRT: Has the government and WP switched positions on the quiet)

On Friday, SMRT reversed its recent losses and was up 0.9% to 1.65. It was at 1.81 juz on 24 April.

Interestingly among the slew of brokers’ reports calling it a “sell”, “nationalisation” seems to be a dirty word, never raised except by two honourable brokers. Only Citigroup was willing to hint at re-nationalisation, “We’d even dare conjecture a Government-led end game, while only Kim Eng suggested that “selective nationalisation” is already taking shape, “A hybrid model, where the Government comes in to inject money, is perhaps the best model possible under the circumstances … like selective nationalisation where the Government pumps in money in certain areas … being done already – take for example, the Government co-paying for the buses to help operators expand the fleet.”

UBS said SMRT is highly likely to move to a new rail-network financing framework where it would pay the government for an operating lease instead of owning train assets,

And only Citigroup is willing to hint at, “We sense more drastic actions are needed, perhaps raising capital to shore up finances.” In simple English, it says a rights issue is possible. Everyone else was silent on this pink elephant in the room.

I think a rights issue is very highly probable.

Let’s go thru some numbers. At Friday’s close, the mkt cap of SMRT was $2.49bn., of which $1.35bn can be attributed to Temasek (It owns 54.3% of SMRT).

Now SMRT has plans to spend $900m over the next eight years and it wants LTA (i.e. the taxpayer) to share the cost. What if the government tells SMRT that it shld fund two-thirds of the cost because the Commission of Inquiry finds that SMRT was not maintaining the tracks properly. (I’m assuming the COI makes this finding based on the way the inquiry is going).

To fund this $600m, SMRT’s directors call for a deeply discounted rights issue to raise $600m (about 24.1% of SMRT’s mkt cap as of Friday). Add to that they say that dividends will have to be cut drastically*, and that Temasek has agreed to underwrite any shares that minority shareholders refuse to take up. Temasek will say that its decision to support the rights issue is a “commercial decision” of a long-term shareholder. Right, and pigs can fly, a leopard can change its spots, KennethJ and TJS can stop boasting, Chiam can renew the SPP’s leadership, and Yaacob can tame the internet tsunami by building a CoC flood wall.

In such a scenario, Temasek could end up with 75-80% of SMRT, as many minority shareholders decline to take up their shares because of the reduced dividend payments.

Ain’t this partial re-nationalisation? And Temasek can have its cake and eat it too, depending on whether the other shareholders subscribe to the rights. Since SMRT was listed in 2000, Temasek has received $694.3m in dividends (I’m including the dividend declared recently). A $600m rights issue and assuming it has to take up all the rights shares still leaves Temasek $94.3m ahead. Might as well make it $700m rights call then, shall we?

Ain’t nationalisation of the public tpt system in the WP’s manifesto (I’ve blogged on this and that the transport minister parrots his predecessors’ defence of the rojak “for profits” system). Lucky Tan has this video of my friend Eric Tan then a WP member (and treasurer) talking abt nationalisation at the last GE. So the silence of the WP which I’ve raised before) is strange, and in the longer term worrying (No can trust its manifesto promises, why shld voters trust the WP?).

So I hope in the May session of parly, GG for one can raise the issue of nationalisation and put the government on the defensive. Why GG? In July last yr, he wrote this on nationalising the public tpt system. This was after Eric Tan had left WP in a huff, so the call for nationalisation of the public tpt system did not end when Eric Tan left.

If the WP remains silent on nationalisation of the public tpt system, it would remind me of a Sherlock Holmes mystery:

Detective: “Is there any other point to which you would wish to draw my attention?”

Holmes: “To the curious incident of the dog in the night-time.”

Gregory: “The dog did nothing in the night-time.”

Holmes: “That was the curious incident.”

BTW, OCBC (a ex-bull on SMRT) is still relatively bullish. It downgraded SMRT to hold from “buy” and lowered its target price to S$1.71 from S$2.04, citing weaker-than-expected earnings for 2012 because it estimated that SMRT’s capital expenditure in 2013 will rise to S$500 million due to higher expenses needed for upgrading its assets.

CIMB cut its target price from $1.68 to $1.50, suggesting a switch to ComfortDelGro to maintain an exposure to the land transport sector. Deutsche cut its target price to $1.61 from $1.75 while J P Morgan downgraded the stock from “overweight” to “neutral” with a target price of $1.60. Phillips cut its target price to $1.33, maintaining its “sell” call. I suspect Phillips is right. A rights issue will be priced at around the $1.33 level.

I’d buy some shares then. Never bet against Temasek when it comes to a local counter.

——

*”Some [analysts] expect SMRT to cut its dividend payout from 70-80 per cent of profits historically to at least 60 per cent.” (BT). What if this was reduced to 25%?

Temasek: Rebalancing its Chinese bank portfolio

In Banks, China, Temasek on 03/05/2012 at 6:04 pm

Last month, Temasek bought US$2.3bn worth of shares in Industrial and Commercial Bank of China (ICBC), taking its overall stake in the bank to 1.3%. I commented that it was increasing its bet on the big Chinese banks (it owned big stakes in three of them) when the mood on them was getting bearish.

Well it is now sell US$2.4bn worth of its shares in Bank of China and China Construction Bank.

So overall, it is reducing its stakes in BoC and CCB (locking in some profits: it got into these at very attractive prices as a cornerstone pre-IPO investor) while adding a stake in ICBC to the mix at a slight discount to the market.

Update on 4 May 2012 at 3.10pm: More details http://www.bloomberg.com/news/2012-05-02/temasek-selling-2-4-billion-in-boc-china-construction.html

The Philippines: Its time has come finally?

In Emerging markets, Temasek on 28/04/2012 at 10:25 am

With even my dogs knowing abt the Indonesian story, while investors are getting excited about Cambodia and Burma, rightly, and rediscovering Vietnam (later abt it in the week), the Philippines has been quietly (a surprise as Filipinos tend to be excitable, boastful and noisy) getting things right.  

But some investors are aware and reaping the benefits. Last yr, the Philippines stk market was the 7th best performer (and I think tops, 2.% rise, in Asia: yup was a bad yr overall for Asian and global mkts), and so far this yr it is among the top 10 globally, up more than 20%.

The Philippines, after years of indebtedness, is a net creditor.
the country is getting its fiscal house in order. … The deficit has narrowed from a worrying 5-6 per cent a decade ago to a manageable 2 per cent …
the political situation is vastly improved. (The FT (recently) via Today.

Remember that Brazil is finally becoming the powerhouse it always had the potential to be after almost 100 yrs of disappointing investors regularly. But then Argentina has gone the other way. Bulls can only hope that Filipinos are more like Brazilians, even though they like the Argies have Spanish blood, rather than Portugese blood)

BTW, Temasek is Filipino-lite. When it was unfashionable to own shares in the Indonesia, it had major stakes in Danamon (now being sold to DBS) and BII (sold at very high valuation to sucker MayBank) and in Indosat (sold at nice profit). It doesn’t own anything direct in the Philippines: no banks, no telcos.

Local banks presence is pretty light in the Philippines when compared to Indonesia. DBS has a 21.4% stake in BPI via its 40% stake in Ayala DBS where Ayala has the majority 60% stake. UOB seems to have a 2% stake in BDO Unibank which has juz called a massive US$1bn rights issue. OCBC doesn’t seem to have a presence in the Philippines. All three local banks have subsidiaries in Indonesia.

Singtel has major investments in the Philippines (via Globe 47% which it controls together with Ayala 32%) and in Indonesia. Global is the second largest telco in the Philippines.

Temasek’s Chinese banks have an unending appetite for capital

In Banks, China, Temasek on 27/04/2012 at 6:54 pm

Regular readers will know that Temasek’s investments in Bank of China and China Construction Bank are great investments. It came in as a pre-IPO cornerstone investor and unlike the Western banks that had similar status had not sold out. Gd friend of China. It trades out and in of these stocks to make realised profits. But these trading profits are peanuts as the trading positions are peanuts in relation to its holdings in these banks

And that it recently bot Goldman Sach’s remaining stake in ICBC, at a slight discount to its mkt price. 

As this article explains these banks have an unending appetite for capital because they are “squeezed for capital”. So Temasek has to be willing to cough up more of our money if it wants to avoid being diluted when rights issues are called.

Analysing Temasek’s investment in another Chinese bank

In Banks, China, Financial competency, Temasek on 16/04/2012 at 7:06 pm

Temasek has agreed to buy Goldman Sachs’s shares in the Industrial and Commercial Bank of China (ICBC), the world’s largest bank. It will buy US$2.3bn worth of ICBC shares, taking its stake to 1.3% in the bank.

In an interview with Reuters at the end of March, Ho Ching’s presumed successor-in-training, Temasek’s head of portfolio management,acknowledged the heavy allocation to financials, but noted that it holds four very good banks: Bank of China, China Construction Bank, DBS Group and Standard Chartered. Well it has added ICBC to this list, and at a price close to the market price, unlike the stakes in the other two Chinese banks where it got a “special” price as a pre-IPO cornerstone investor.

But is it a wise move?

True, since the lows last October of the Chinese and HK stock markets, the shares of the four leading Chinese banks (including Bank of China, China Construction Bank and ICBC) have gone up by more than half, easily outperforming the broader market.

But since March, prices have been off (but masked by general market falls) because of concerns abt China’s growth, bad loans and comments by the  Chinese PM, Wen Jiabao, who hinted  of breaking the monopoly state-owned lenders have enjoyed in China’s banking sector. (The sector is dominated by four big state-owned banks and Temasek now has significant stakes in three of them.)

Mr Wen said that their monopoly was hurting businesses in the country, as they had few options to raise capital.

“Frankly, our banks make profits far too easily. Why? Because a small number of major banks occupy a monopoly position, meaning one can only go to them for loans and capital,” he was quoted as saying by China National Radio. “That’s why right now, as we’re dealing with the issue of getting private capital into the finance sector, essentially, that means we have to break up their monopoly.”

The lack of easy availability of capital has often been cited as threat to growth of small and medium-sized businesses in China. There have been fears that some of these businesses, seen as key to China’s growth, may turn to unofficial sectors for capital, increasing their borrowing costs substantially

But Temasek could be betting on, “Wen has one year left [in his term].” This was said by an unnamed Chinese state banker quoted by Reuters. “This is a task for the next generation of leaders. It cannot be accomplished within one year.”

But the banker could be wrong, Wen could be telling us what has been agreed upon between his generation and the next generation of leaders.

Remember, It took a beating on its finance industry holdings after the 2008 crisis, losing about $5 billion in stakes held in Barclays and Merrill Lynch, now part of Bank of America. It has since trimmed its financial holdings by 4 percentage points to 36 percent of the portfolio. Last month, it sold a 1.4 percent stake in India’s No.2 lender ICICI Bank. From said Reuters reported.

And of the remaining two “very good banks” where Temasek has significant stakes, DBS has juz decided to buy Temasek’s stake in Bank Danamon. Management will now be preoccupied with getting the deal approved by the Indonesian authorities, then integrating the bank into DBS. Before this deal, management had finally got to grips with DBS’s operational problems. The danger is that the focus on the Danamon deal may lead to backsliding in the area of operatons.

The genuine jewel is StanChart, but by global standards, it is “peanuts”.

Role Reversal for Bank of America and Citigroup

In Banks, GIC, Temasek on 11/04/2012 at 7:22 pm

Going into the earnings season, these two big banks have reversed roles: Bank of America, which last year faced concerns about its health, has rallied this year, while Citigroup now confronts doubts.

NEW YORK TIMES

For the record:

— Temasek dumped its stake in BoA in 2009 when hedgies were buying, losing, it is estimated US$4.6bn;

— GIC is now sitting on paper losses on its remaining stake in Citi (stake was profitable last July, see link below); and

— one LKY said in 2008 that these (and UBS, where GIC still has unrealised losses) were beyond long-term investments. There were 30-year investments.

Err Temasek can do savvy deals too

In Indonesia, Temasek on 08/04/2012 at 7:36 am

TRE’s and TOC’s readers, and other S’porean netizens may not realise it, but Temasek doesn’t always lose money on its overseas investments.

In 2008, just before the financial crisis, Temasek sold its majority stake in BII for a price that put a value of the Indonesia bank of 4.6 times book value. The  sucker buyer was MayBank of M’sia. It paid Temasek US$1.13bn. NYT article. MayBank later justified its cock-up by pointing out that around the same time, HSBC paid around the same price (book value wise) for another Indon bank. Critics pointed out that in the context of MayBank’s financials, the amount was a big a sum while HSBC’s purchase was “peanuts” relative to HSBC’s financials.

Analysts now say that MayBank’s plans to sell a stake in BII for the same price as it paid Temasek is unrealistic.

Well the price that DBS is paying Temasek for its majority stake in Bank Danamon works out to be 2.6 times book value, and is considered reasonable but pricey. The premium over book has dropped substantially. But it is a gd deal.

And going back in history, Temasek got a great deal when it sold its PosBank stake to DBS. Foreign broker analysts (though not local broker analysts and our constructive, nation-building media) were grumbling that Temasek was getting DBS shares at a big discount to DBS’s fair value. FTR, no foreign analyst is arguing that Temasek is getting DBS shares at a big discount to its fair value in the Bank Danamon deal.

Moral of these examples: Temasek can do savvy deals with M’sians and DBS. Nothing to do with fact that DBS is controlled by Temasek. It’s that DBS likes to do “strategic” deals and, there are studies (dispued) which show that because strategic deals involve paying over the odds, shareholder value is destroyed in the process.

And consider this too.  RRJ and Temasek have been big backers of the trend to use natural gas. Last year they put US$250m into Nasdaq-listed Clean Energy Fuels, a US-based group that provides natural gas fuel for transportation at gas stations in the US at a saving of US$2 a gallon.

That transaction, which closed in January or February this year, has already more than doubled in value.  

And this looks pretty savvy too. Singapore state investor Temasek Holdings and private equity firm RRJ Capital bought nearly half of the shares in the $1.34 billion offering by PetroChina Co’s unit Kunlun Energy Co Ltd, two sources with direct knowledge of the deal said on Tuesday. $=US$

Kunlun Energy and Clean Energy Fuels have a similar mandate and RRJ hopes to bring the two together, according to one report. BTW RRJ is founded by a Malaysian Chinese.

Bang yr balls in frustration Ho Ching detractors, and all haters of the S’pore government and its agencies. Temasek can do savvy deals if M’sians are involved. Either as suckers buyers or as co-investors.

Jokes aside, remember the lines from “If”

If you can meet with Triumph and Disaster
And treat those two impostors just the same;

Well in investing, as in other aspects of life, the line between success and failure is very, very narrow.

Examples:

 KKR and TPG, giant US private equity investors invested billions of their investors’ funds in TXU. One of the things they were betting on was that natutal gas prices would be priced-off oil prices for the foreeable future. Err now even Buffett has lost money buying TXU bonds. The problem is that recent  technological developments mean that natural gas can be extracted from shale, decoupling its price from that of oil. Natural gas is no longer a scarce commodity.

Now all three have extremely gd track records as savvy investors. BTW Temasek’s Merrill Lynch deals would be like this deal. The conventional wisdom was that the deals were risky but that the prices paid reflected the risk and that in all probability the deals would work out for the investors.

Now the conventional wisdom was that the investors got things wrong* . But as FT’s Lex reports:

They paid too much. That was the consensus when 3G Capital took Burger King private in 2010 for a total enterprise value of $4bn, or nine times trailing earning before interest, taxes, depreciation and amortisation. How did things go? Well, Justice Holdings has just paid $1.4bn and will get 26 per cent of Burger King’s common shares in return. This now puts the enterprise value of Burger King at $8bn – an ev/ebitda multiple of 16 times (14 times if you follow Burger King’s practice of excluding restructuring and other costs). By comparison, the multiples for global powerhouses McDonald’s and Yum Brands are 11 and 14 times. Arcos Dorados, the largest Latin American McDonald’s franchisee, trades at 12 times.

3G’s partners put $1.2bn of cash into the original deal and borrowed the remainder of the price. They also paid themselves a near $400m dividend last year, thank you very much. If they had sold the whole company at the price Justice has paid, 3G would have more than doubled its money in a year and a half. Over the same period, McDonald’s and Yum shares have returned 38 per cent and 64 per cent, respectively. Consensus now: would you like fries with that, gentlemen.

*Bit like Temasek’s Shin deal. Brokers were telling their clients with shares in Shin to tender the shares. They would never see such a price again. But our nation-building, constructive media failed to report these views here.

DBS: Investors don’t like the Indon deal

In Banks, Corporate governance, Indonesia, Temasek on 03/04/2012 at 11:34 am

Well DBS is down 0.44 to 13.74 some 3% from Friday’s close.

Despite all the propoganda from our constructive, nation-building mainstream media, aided and abetted by the wires and most brokers, investors don’t like the Bank Danamon deal. To be fair, investors nowadays don’t like their investee companies doing mega strategic deals (like Pru’s attempted purchase of AIA last year) because the historical numbers (still disputed) seem to show that strategic deals destroy shareholder value.

Well the non-Temasek shareholders of DBS will have an opportunity to reject the deal, if they think that Temasek benefits far more than DBS? BTW, did you know that when DBS bot PosBank from Temasek all that many years ago, it was a great deal for Temasek, not so gd for DBS .

Temasek: Meritocracy at work?

In Corporate governance, Temasek, Vietnam on 02/04/2012 at 6:28 am

So the S’porean MD of Singapore Technologies Telemedia (ST Telemedia), a 100%-owned unit of Temasek, Lee Theng Kiat, is now a president of Temasek, and its general counsel. He is in exalted company as one of the other two presidents was once a contender to be CEO of BoA. http://www.bloomberg.com/news/2012-03-30/temasek-hires-st-telemedia-s-lee-as-president-general-counsel.html

But it was also reported last week by the wires  that Eircom applied for court protection as expected last to allow it to restructure its 3.75 billion euro (S$6.29 billion) debt, a move it said was “necessary and unavoidable”.

The application follows the company’s agreement to support a proposal under which most senior lenders take control of the company from current majority shareholder ST Telemedia and cut its debt by 40 to 50%.

ST Telemedia bought 65% of Eircom in 2009 for 140 million euros in cash and shares. An employee share trust owns the other 35%. Eircom has 4.1 billion euros of gross debt and more than 300 million euros of cash on its balance sheet, giving net debt of around 3.75 billion euros.http://www.reuters.com/article/2012/03/29/us-eircom-idUSBRE82S14R20120329?rpc=401&feedType=RSS&feedName=technologyNews&rpc=401

Lee was the MD of ST Telemedia when Eircom was purchased.

Well the Communist Party and Government in Vietnam are not so forgiving of executives who goof. Nine top officials have been given tough jail sentences for their role in the near-bankruptcy of one of Vietnam’s largest state-owned companies. Err they  were convicted of being directly responsible for a loss of US$43m http://www.bbc.co.uk/news/world-asia-17561109. Peanuts when compared to Euros 140m.

BTW, came across this comment about Merrill Lynch recently, “From July 2007 to July 2008, a total of [US]$19.2 billion vaporized – or [US}$52 million in losses per day!” For the record, Temasek bot into ML in December 2007 and in late July 2008.http://moneymorning.com/2008/07/29/merrill-lynch/

Temasek’s loss ran into billions of US dollars http://online.wsj.com/article/SB124236495798923123.html. The Vietnamese officials would have been hung, drawn and quatered if they had been held responsible for such a loss. Nothing happened to Temasek officials.

Our SWFs owned four out the10 biggest investment flops of the last 10 yrs

In Financial competency, GIC, Temasek on 26/02/2012 at 6:35 am

(Or “GIC may have bot another dog”

They owned significant stakes of the four (BoA, Citigroup, UBS and Barclays) of the 10 biggest dogs that had fleas on their fleas between 2002 and 2012. To be fair, the big stakes were bought in late 2007 or early 2008. GIC and Temasek each has two dogs to their shame. GIC still owns stakes in UBS and Citigroup. Temasek cut its losses at the nadir of the financial crisis of 2007-2009, in early 2009, allowing hedgies and Arabs to make money on BoA and Barclays.

http://www.economist.com/blogs/graphicdetail/2012/02/daily-chart-8

(Remember how the constructive, nation-building local media were trumpeting the purchases as indication that our SWFs were “the greatest”. Well they were “the greatest”: the greatest mugs. Funny our media never told us that.)

Hope GIC’s big stakes in Glencore and Bunge (both commodities traders, the former in metals, the latter in agricultural products) don’t go the way of UBS and Citigroup (big banks).

GIC now has over 5% of Bunge.

Via shares and convertible bonds that convert into Glencore shares, it also has a significant stake in Glencore. GIC has been doing some financial engineering to reduce its cost of Glencore shares, which I assume it bot at the IPO. The price has fallen 18% since then. As to its convertible bonds, it is getting a good interest rate of 5% but the equity value of the bond is 17% down, I calculated.

GIC recently raised its stake in Xstrata by 20%  and trimmed its holding in Glencore International after the companies said they planned to combine. GIC has increased its Xstrata stake to 29.05 million shares from 24.1 million shares since Feb 8, the day after Glencore offered to acquire the shares in Xstrata it doesn’t already own for US$37.6 billion, data compiled by Bloomberg show. GIC cut its Glencore stake by 21% t to 33.2 million shares.

Thai co outbids Shell

In Energy, Temasek on 25/02/2012 at 10:36 am

Thai oil and gas company PTT Exploration and Production said on Friday that it had submitted a rival US$1.7 billion bid for energy exploration Cove Energy, trumping a previous offer from Royal Dutch Shell by 12.8%. PTT is state-controlled and is the second largest listco on the Thai stock exchange. It is capitalised at slightly more than US$19bn.

http://dealbook.nytimes.com/2012/02/24/ptt-makes-rival-bid-for-cove-energy/?nl=business&emc=dlbkpma21

Remember Chips Goodyear? He was going to be Temasek’s CEO before he quit Temasek’s board. Seems he wanted Temasek to make these kind of big mining or energy bids. Seems this was too exciting for Temasek or its shareholder. 

China’s collapse ‘will bring economic crisis to climax in 2012’

In China, Temasek on 15/01/2012 at 5:56 am

But it’s sunshine from 2013 onwards, if you still got the money.

A looming hard landing in China will bring the financial and economic crisis of the past five years to a climax in 2012, one of the City of London’s leading analysts has warned.

Albert Edwards, head of strategy at Société Générale and one of the UK’s leading “bears”, said the next 12 months would be the “final year of pain and disappointment”.

http://www.guardian.co.uk/business/2012/jan/11/china-economic-collapse-global-crisis

SDP, KennethJ and the usual grumblers will have a field day if this guy is right (he has a good track record, this last few yrs) what with Temasek’s and its TLCs’ (Think DBS, CapitaLand, KepLand), and other GLCs’ (Ascendas for example)  big bets on China.

Predicting a sharp slowdown in activity in the world’s fastest-growing emerging economy, Edwards said: “There is a likelihood of a China hard landing this year. It is hard to think 2013 and onwards will be any worse than this year if China hard-lands.”

http://www.guardian.co.uk/business/2012/jan/11/china-economic-collapse-global-crisis

Higher standards expected from BTimes and a Temask-linked group?

In Corporate governance, Media, Temasek on 24/11/2011 at 5:49 am

Recently, K-Reit Asia succeeded in getting unitholder approval for its plan to buy 87.5%  of Ocean Financial Centre (OFC), a prime Grade A Raffles Place office building, and raise some S$976 million through a rights issue (17 for 20) to fund part of the cost. It needs S$1.57 billion to buy from parent company Keppel Land a 99- year lease of the OFC office building. KepLand will see a net gain of about S$492.7 million from the sale. Meanwhile despite the massive rights issue, K-Reit will have leverage of around 42% by end of 2011, more than the Reit sector average of 36%. This at a time of a looming slow down.

Some unitholders questioned

— the price and timing of the deal what with a recession looming;

— that while the building in Raffles Place has a tenure of 999 years with 850 years remaining on the lease, but KepLand is only selling a 99-year lease;

— why K-Reit is paying its manager (which is owned by KepLand) an acquisition fee, though it is buying the asset from its parent company;

— the independence of the manager.

But dissenting unitholders have to accept much of the blame in allowing K-Reit an easy ride at the EGM when resolutions were passed with a show of hands. The chairman of K-Reit rejected a call to call for a poll at the EGM presumably because there was no five-member call for a poll or a request by unitholders controlling 10% voting rights. 

If dissenting unitholders are not prepared to stand up and be counted, they deserve to be bullied.

Business Times decided to raise a stinker, “This isn’t the first time – and probably it won’t be the last – that issues like these arise at a Reit. For some time now there has been growing disquiet among corporate watchers about weaknesses in the corporate governance structures in Singapore Reits where the Reit sponsor wholly owns the Reit manager, and also holds a large stake in the Reit.” Well BT should remember that there is a bear market, and issues abt corporate governance always rise when investors lose money.

“[C]ases of sponsors selling properties to Reits have raised concerns about conflict of interest, and unitholders have often questioned the purchase of these assets and how they were priced”. BT does not point out that

— it is public knowledge that here the Reit sponsor wholly owns the Reit manager, and also holds a large stake in the Reit; and

 — in the K-Reit deal and other deals involving possible conflict of interests, the selling unitholder has by law to abstain from voting; and

— there have to be independent valuations.  

“There is also the need to have more transparent structures to pay Reit managers and to tie these more closely to performance”, according to BT. It’s not as though these are hidden from investors or made retrospective. They are publicly available info.

Sorry BT. A piece of rubbish.  

Having said all this, a Temasek-linked group like Keppel should set an example for others to follow. At the very least, K-Reit should have allowed a poll on the resolutions, rather than a show of hands. After all, the law is likely to be changed to make polls mandatory at general meetings. “Justice must not only be done, but seen to be done” and “Caesar’s wife must be above suspicion”.

And K-Reit chairman Tsui Kai Chong’s comment that “Our father organisation, Keppel Land, is only willing to sell it to us for 99 years”, tells me that, at the very least, he has an “attitude” problem: deferring to his KepLand where  he is an independent director.

Temasek’s StanChart bonds: No losers?

In Banks, Temasek on 24/10/2011 at 6:59 am

Despite the following and other rants, ‘Temasek’s S$650m issue of bonds exchangeable into StanChart shares was oversubscribed.”The order was $1.25 bn,” it was reported. I was not surprised.

Singapore Notes ranted, Stanchart shares are currently trading at £13.73 (yesterday’s quote); the highest level reached during last year was £19.75. The British £ has also taken a pounding, diving from S$2.90 to S$2 yesterday, a stomach churning plunge of 30%. Yahoo! Finance indicates today’s range will be £1.9907 – £1.9937.

So what fool (as in “fool me, hah?’) would bet that the Stanchart share price would go up 27% in 3 years’ time? That’s a tantalising return of 9% per annum, assuming the pound-euro correlation doesn’t get any worse. Reuters is reporting a sterling drop, as latest UK data adds to the gloomy outlook.

Juz look at the volatility of the share price. In the last 12 months, it has been up to £19.75. More than 27% from current prices. And in November 2008 it was trading around £8. Investors buying the bonds are betting that StanChart’s share price recovers within three years. Not an unreasonable bet, given the volatility of StanChart’s (and other banks’) share price in recent years. Interesting chart.

At worse, they lose their funding costs (if they borrow money to buy the bond) or opportunity costs (if they invest in cash or bonds) for three years. Their upside is 27%++.

To quote Reuters Breakviews, One part would be a zero-yield bond, with a face value of S$36. Assume lenders to triple-A rated Temasek normally demand a 1.8 per cent annual return, and the bond is worth around S$34.50 today.

The other part is a call option on Stanchart shares.

Plug the lender’s current price, its forecast 3.5 per cent dividend yield, and the implied volatility of Stanchart’s stock into an options calculator, and it looks to be worth S$4.50.

Put together, the two bits of paper have a total value of S$39 – some 8 per cent more than investors paid. Taz why the issue was oversubscribed.

Unlike me, the writer thinks it ain’t such a gd deal, But it’s probably not such a sweet deal. The value of the call option is inflated because Stanchart’s shares are twice as volatile as they were before the summer.

If the shares return to their steadier state, the option is worth closer to S$1, leaving the value of the whole package a little below the sticker price. I think volatility will persist.

‘The writer goes on to talk about the deal’s advantages for Temasek, For Temasek, there are obvious attractions. Even if all the bonds are exchanged for shares, it will retain a 17 per cent stake in Stanchart.

And if the shares don’t rise much, the fund will have borrowed S$650 million interest free.

But for all that, the savings are small. Say Temasek had simply borrowed directly from the bond markets. Over three years, its total interest bill would be less than S$40 million.

Moreover, the bond issue triggered a mini-rout in Stanchart shares, leaving Temasek with a paper loss on its remaining stake 10 times the size of the interest costs it saved.

Other than demonstrating its financial prowess, Temasek doesn’t have much to show for its wizardry. True but given the jitteriness of the markets, the shares would have fallen for other reasons. Banks are not the flavour of the month.

Temasek’s StanChart Bond Issue

In Banks, Temasek on 19/10/2011 at 2:45 pm

I’m surprised that a blogger whom I respect could get it so wrong with his analysis of Temasek’s stake in StanChart and the share price that investors can buy into StanChart via Temasek’s latest bond issue.

Singapore Notes reports, “The zero coupon bonds which mature in 2014 can be exchanged for Stanchart shares at £36.29 per share during a 3 year holding period, a 27% premium over Monday’s price of £14.29 on the London Stock Exchange.” A 27% premium to £14.29 works out to £18.15. not £36.29.

As to the value of Temasek’s stake in S$, he used as his starting point, “the purchase of a 11.5 % stake from Khoo Teck Puat’s estate in 2006. Then Stanchart shares were trading at £15.24, when the exchange rate was S$2.90 to £1.”

Since then there have been two massive and deeply discounted rights issues. The one in November 2008 was done at  £3.90, a 48.7% discount to the last done share price before the rights issue announcement. The rights ratio was 30 new shares for 91 existing shares. In October 2010, it called for a 1 for 8 rights issue priced at £12.80, a 32% discount to the last done share price before the rights issue announcement.

Temasek: Where things can go wrong.

In China, Temasek on 19/10/2011 at 6:44 am

Credit Suisse analyst Sanjay Jain said in a report last week that he thinks that up to 12%  of all of China’s outstanding loans may go bad and non-performing loans may likely account for all of the banks’ equity. Current NPL ratios hover at around 1% or the top Chinese banks.

Ops a daisy. As Temasek has major (and so far very profitable) stakes in two of China’s top four bank, Bank of China (4%) and Construction Bank of China (7%), predictions such as this (and Credit Suisse is not alone, just the latest and most pessimistic) should worry S’poreans.

As Temasek got the initial substantial stakes at bargain prices (courtesy of the Chinese government), selling part or all these stakes requires Chinese approval. At a time when the Chinese government is supporting the shares of the major four banks, such approval is unlikely.

Not another debacle like Shin, ABC Learning, Merrill Lynch or Barclays in the making?

A TLC where losing $1m is “peanuts”

In Corporate governance, Temasek on 20/09/2011 at 7:19 am

This is the impression I get after reading in the nation building, constructive ST that the new CEO of Wildlife Reserves Singapore (WRS) abruptly cancelled the Night Safari’s Halloween Horrors event, despite the WRS having spent close to $1m on organising this popular annual event. This means that close to $1m will have to be written-off, as there will be no revenues from this popular event.

It’s not as though the WRS (owned 80% by Temasek and 20% by the S’pore Tourism Board) is rolling in money. I understand that this is one flea-ridden animal that cannot be sold because it is in constant need of financial injections. So she must have consulted and gotten her board of directors’ approval, before taking a million dollar hit.

So the board too must think that $1m is “peanuts”. Not their money leh. It is our money. We own Temask and the tourim board.

But let’s to fair to the CEO. Maybe she had a revelation from her god that god would provide, and that she convinced her board that her god was stronger than the devil. But what if she goofed? She has form in goofing.

The last thing newly elected president, Dr Tony Tan, needed after a bruising election campaign was for for his comments on the need to have more famiy bonding activities to be linked to the CEO’s cancellation of a popular event. “He kill-joy or something worse?”, I could hear the bloggers thinking. after her attempt at linkage. He was not amused and she had to apologise for her most unfair attempt to link his comments to her action.

Finally, does the devil have friends? 

She is getting a terrible press from the ST. Are there devil-worshippers among the reporters and editors of the ST? Remember they have form when it comes to attacking Christians, the devil’s arch-enemies. A few years ago, DPM Wong Kum Seng pointed out that the ST’s coverage of the AWARE fight was biased against the Christian members who opposed the old guard who they accused of promoting anal sex and homosexuality in schools. Note that the government withdrew AWARE’s status as a provider of sex education services to schools after the allegations were made.

Temasek the hedge fund?

In Banks, China, Temasek on 01/09/2011 at 8:29 am

A consortium that includes Temasek and its wholly owned hedge fund Seatown Holdings has acquired a 5% stake in China Construction Bank it was reported on 30 August 2011

It had unloaded a portion of its own stake in the Chinese lender about a month ago, when, by my calculations, the price of CCB shares was  abt 10% higher. And given that it bought the latest batch of shares at a discount, Temask could have made 20% on the sale and repurchase.

Gd trade.

Description of trades

http://www.nytimes.com/reuters/2011/08/30/business/business-us-bankofamerica-ccb.html?nl=business&emc=dlbka32

Standard Chartered beats forecasts with 17% profit rise

In Banks, India, Temasek on 04/08/2011 at 7:51 am

London-based, Asia-focused Standard Chartered Bank (Temasek owns 19%) has reported that pre-tax profits for the first six months of the year were $3.6bn (£2.2bn), up 17% from last year.

Profits grew in all the regions where Standard Chartered operates, except for its biggest market, India, where profits fell by 5%.

Profits grew by 23% in Hong Kong, 34% in Singapore, 14%in South Korea and 19% in China.Income from the Middle East grew 4%, in Africa it grew 10% and in the Americas and Europe it grew 11%.

It blamed rising interest rates, growing competition and regulatory changes for falling profits in India.  It made a big bet in India financing takeover details. Will be interesting to see if these give the bank the same death-defying experiences as it gave some Wall Strret banks in the 1980s and 1990s. https://atans1.wordpress.com/2010/09/10/stanchart-getting-too-aggressive/

Temasek: 4 senior departures in 9 mths

In Temasek on 24/07/2011 at 7:03 am

When there is an average of one senior departure every 2.25 months in a listed company anywhere in the world,  the board of directors and CEO are under a lot of pressure to explain the departures. Shareholders, investors and the media want to know if there is something amatter with the company, how serious is it, and what are then plans to fix the problem.

But when the company is Temasek (the SWF that invests our money), the board and CEO face no such pressure, it seems.

The CEO of Fullerton Fund Management, fully owned by Temasek, resigned in late October last year. His acting successor left in February this year. “Hsieh Fu Hua, a member of Fullerton’s board of directors and executive director and president at Temasek Holdings, will work closely with Fullerton’s chief investment officer and chief operating officer to guide the firm until a new CEO is appointed,” it was announced. http://www.reuters.com/article/2011/02/07/fullerton-ceo-idUSL3E7D702720110207

He is still there it seems. FYI, there are rumours that this unit which manages the money of foreigners suffered badly during the 2007/2008 financial crisis, and the recovery has not helped it much.

This week, two other units had leadership changes.

Charles Ong and Nasser Ahmad quit as co-CEOs of Seatown, the “hedge fund” of Temasek. But Ong is not leaving the Temasek group. Ahmad is reported as leaving to return to the private sector. https://atans1.wordpress.com/2011/07/19/reshuffling-the-chairs-aboardtemaseks-hedge-fund/

Then Francis Rozario resigned as CEO of Temasek’s Fullerton Financial Holdings, the unit that invests in Asian banks. https://atans1.wordpress.com/2011/07/20/temasek-loses-74-of-pakistani-investment/

Again like in the case of Fullerton Fund Mgt, their replacements are from the parent company.

Given the frequency of the changes, surely S’poreans should be told if these changes are a statistical fluke (like several 100-yr or 50-yr floods in the space of 12 mths), or if there is something amiss at the manager of our money?

Fat chance. Pigs will fly or Tan See Jay will get his COE or TKL will get elected as president before any explanation is given.

Temasek loses 74% of Pakistani investment

In Temasek on 20/07/2011 at 5:22 pm

“According to estimates by Pakistan’s Invisor Securities, Temasek has invested about US$540 million (S$657 million) in NIB and is sitting on a paper loss of about US$400 million.”

This quote appeared as the last sentence of a Reuters article carried by our nation building, constructive Today. The article was abt Francis Rozario resigning as CEO of Temasek’s Fullerton unit, the unit that invests in Asian banks.

Coming back to the loss, this means NIB is worth only US$140m, and that Temasek has an unrealised loss of 74%.

Update at 6.15pm on 20th July 2011: ST has the same story. And the above quote too appeared as the last sentence. Some people were careless in editing the story for us “daft” S’poreans. Interestingly, BT doesn’t report the resignation.

Reshuffling the chairs aboard Temasek’s “hedge fund”

In Temasek on 19/07/2011 at 7:08 am

Charles Ong and Nasser Ahmad are quitting as co-CEOs of Seatown, the “hedge fund” of Temasek reports Bloomberg.

Mr. Ong, who is also senior managing director of special projects at Temasek, will remain at Temasek. Mr. Ahmad will be returning to fund management.

For the record, Charles Ong was the point man on the Shin Deal that lost billions.

Related postings

https://atans1.wordpress.com/2010/02/22/temasek-the-significance-of-seatown/

https://atans1.wordpress.com/2010/03/06/better-at-destabilising-than-investing/

Temasek: Confused

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

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

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

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

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

(All these also appeared in newspaper ads.)

The numbers look gd.

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

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

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

Mapletree Logistics is interesting

In Logistics, Property, Reits, Temasek on 26/06/2011 at 6:45 am

This Temasek-related Reit invests in logistics facilities in the region. Its latest investment is in S Korea.

Its yield is 6.8%. While its last traded price is $0.92 and its last reported NAV is $0.85, OCBC recently came out to say that OCBC calculated that its revised NAV is $1.01 (also OCBC’s target price for the stock). Not a rich discount to the share price but pretty decent, given its Temasek credentials.

I might add it to my portfolio.

Experts differ on prospects for China; but we got big bets on China

In China, Temasek on 20/06/2011 at 9:36 am

Some see serious trouble ahead, some see the troubles as to be expected in a rapidly expanding economy, and are notb that serious. http://www.bbc.co.uk/news/business-13802453

And do remember Temasek has big bets on China.

https://atans1.wordpress.com/2010/02/08/tlcs-in-china-groupthink-or-mastermind-at-work/

https://atans1.wordpress.com/2010/09/03/sporeans-temasek-may-have-a-problem/

So does GIC.

Apple has more cash than GIC & Temask combined

In GIC, Temasek on 27/04/2011 at 9:28 am

According to Asymco: “If Apple had no revenues, the current cash would sustain operations (SG&A and R&D) for over 7 years or until the middle of 2018.”

“The funds are big enough to place Apple’s CFO office in the top 100 largest fund managers in the world and larger than any hedge fund manager.” More than Temasek and GIC combined, FYI.

SGX: This is Plan B

In S'pore Inc, Temasek on 21/03/2011 at 1:54 pm

The SGX’s CEO is reported by the FT to have said that the SGX’s planned takeover of ASX is its Plan B. He clarified that Plan A was organic growth by introducing new products. A few months ago he said if the ASX bid failed, SGX “had other fish to fry”. This implied to people like me that Plan A was the SGX takeover and Plan B was some other takeover.

The fact that he has “clarified” his earlier comments shows that he is panicking. See the previous post for the reason.

S’pore Inc: SGX misread Oz

In S'pore Inc, Temasek on 20/03/2011 at 10:31 am

A A$7.3 billion ($7.1 billion) bid by the Singapore Exchange (SGXL.SI) to take over its Australian rival is faltering as the Australian government, the regulator and a key opposition party are all set to reject it, the Sydney Morning Herald said.  Reuters article

The SMH story is extremely credible was it was written by the paper’s chief political correspondent. 

This shows that SGX did not do its homework. Everyone who has a say in approving the bid seems against it. Reminder: the takeover needs the approval of the Foreign Investment Review Board, then the Treasurer (finance minister) and then Parliament (where the governing party does not a majority).

The only people in favour are the ASX board and the shareholders. They would wouldn’t they? The shareholders are being offered a huge premium.

SGX should cut its losses and move on. And sack is FT CEO who, I’ve been assured, is the moving force, behind the deal. It’;s not the first time an FT CEO has messed up SGX. It had a previous FT CEO. But the in-between local-born CEO (now president at Temasek) doesn’t have a gd record too, S-Chips continued to be the primary source of new listings (numberswise) when he was CEO, even though evidence that there were problems with S-Chips was growing.

Citi’s a US bank in name only

In Banks, Emerging markets, GIC, Temasek on 19/03/2011 at 6:04 am

More than 50% of its profits come from emerging markets juz when emerging markets are losing their attractiveness to global investors.

Given Cit’s record of losing serious money by jumping into markets late (think sub-prime, and lending to finance LBOs, US property (in the 80s) and Latin America (in the 80s too), S,poreans should be concerned., given GIC’s 5%(?) odd stake in Citi,

Article

The Fed notified financial institutions that passed a second round of stress tests that they can begin returning money to their shareholders, The results are confidential but already some US banks are saying they will raise dividends this year. Among them are Citi rivals JPMorgan and Wells Fargo. Citi says that only in 2012, will it consider raising its dividends, It got a lousy rating?

And I now know why the executive director of GIC is looking to increase US exposure. Read the rest of this entry »

Lesson for our SWFs

In Corporate governance, GIC, Temasek on 17/02/2011 at 9:18 am

I’ve ranted at how Temasek and GIC allowed investment banks to short change them (and us) in two IPOs:  the share prices traded way above IPO price on listing,

Well it’s nice to see that the Indonesians screwed the investment banks over the Garuda IPO, the share price falling 20% below IPO price, with the underwriters stuck with abt half of the shares,

Now I’m not saying that our SWFs should play that rough with the investment banks — there will be adverse consequences for Garuda when it tries to raise more money and the Indonesian authorities when they try to sell other companies — but our SWFs should try to keep the premiums to around 5%. It’s hard, but they shld try.

China: What we don’t hear from our MSM

In China, Economy, GIC, Temasek on 21/01/2011 at 5:16 am

In their new book, “Red Capitalism: The Fragile Financial Foundation of China’s Extraordinary Rise” (John Wiley & Sons), Carl E. Walter and Fraser J.T. Howie paint a troubling portrait of China’s economy and its financial system. Despite the nation’s mind-boggling growth and images of gleaming skyscrapers and luxury cars, the authors say China’s growth model is flawed and fragile, and they warn about substantial risks accumulating in its banking system.

Q&A

Backgrounder: S’pore Inc has big bets on China

MM got it right, Temasek got it wrong

In Banks, Temasek on 17/01/2011 at 5:34 am

As this article shows, Temasek shld not have been so hasty in selling its stake in BoA, which it got after BoA bot Merrill Lynch where Temasek had a big investment. BOA is doing the things that attracted it to spend US$5.9 bn buying shares in Merill Lynch. Temasek lost US$4.6 bn, it was reported.

Shortly before Temasek sold, MM had said that S’pore Inc’s investments in Citi, UBS, and Merill Lynch had a time-frame of 30 yrs. Temasek held its ML investment for over a yr. GIC still owns shares in Citi (profitable), and UBS (big loss).

(Aside so why should the young listen to him, when Temasek doesn’t? Other instances). Neither does it seem does the local media)

Bank of America is headed for its best year [2011]advising on mergers and acquisitions in Asia-Pacific since 2005, and arranging initial public offerings since 2007, data compiled by Bloomberg show. The combined companies have generated 30 percent more revenue from traditional investment-banking businesses in the region than they did as separate entities … Read the rest of this entry »

S’pore Inc: One up on Korea Inc

In GIC, Temasek on 15/01/2011 at 5:32 am

National Pension Service, South Korea’s biggest investor, may set up a private equity fund with the nation’s business groups, including Samsung Group and Hyundai Motor Group, to invest in overseas resource development.

Sorry Korea, S’pore beat you to these type of ventures. GIC and OCBC’s insurance arm (Great Eastern) joined a group led by U.S. private equity firms KKR and TPG Capital in buying Morgan Stanley’s 34.3% stake in top Chinese investment bank CICC.

GIC bought 9% and 5% stake went to Great Eastern. GreatE paid US$144.3m. Post acquisition, GIC, which already had a 7.35% stake in CICC, will become the second-largest shareholder in the Chinese investment bank. Central Huijin Investment Ltd., an investment arm of China’s sovereign-wealth fund, is CICC’s largest shareholder, with a 43.35% stake.

Keep calm, carry on — No need to rant against Temasek

In Indonesia, Temasek, Uncategorized on 23/12/2010 at 5:27 am

Or write stories defending it.

This story, abt the possibility of the Indon authorities seizing Temasek’s assets there, is nothing to get excited about. Someone wants some money. Remember its Money time!

This blogger is bullish on Indonesian. But he has been around long enough to know that Indonesia’s ideas of good governance (public or private) is not benchmarked to global standards. It is uniquely Javanese.

A few years back, a foreign investor was involved in a dispute with the management of a listco. An EGM was called, and the investor’s resolution won the support of the majority of shareholders in a poll vetted by a major international accounting firm.

The next day, the investor read in the papers that he had lost, and management had won, the vote. When he sought an explanation, he was told, “The counters made a mistake”.

A senior US foreign service officer who was based in Indonesia once told me that Indonesian officials had demanded a bribe from him to process an application even though they knew he was a member of the US embassy there. The embassy raised the issue and were told, “Err misunderstanding brudder”. Still, by the time he left for another posting a few years later, his application was being processed.

So now that Temasek has asked the court if a judgement has been issued, sumeone will say, “You mean you never got it? We posted it months ago. We have sent another copy in the mail.”

BTW, S$13m is “peanuts” as Mrs SM could have put it, but didn’t.

GLP’s non-action:Implications for SGX’s bid for ASX & S’pore Inc

In Corporate governance, GIC, Logistics, S'pore Inc, Temasek on 16/12/2010 at 5:22 am

Global Logistics Properties has replied to a hack’s rant on why it should have disclosed GLP’s non-compete agreement with ProLogis in China and Japan in its prospectus. The GIC-linked company, which listed on SGX in October continues to contend that the “existence of the non-competition arrangement between the company and ProLogis is not material, and continues to be non-material to the ongoing business of the company”.  The quote is from its reply to BT who first exposed this agreement.

I won’t go into the legal issues involved except to say but I find the reply inconsistent. BTW the links to the  reply and rant may go walkabout in a few days’ time.

But what will SGX do? If it does nothing (putting the onus on the central bank: MAS approve prospectus leh), or investigates and then clears GLP, it will fuel Ozzies suspicions of the SGX takeover of ASX for two reasons. Read the rest of this entry »

StanChart: Shares fall 6% in 2 days

In Banks, Emerging markets, Temasek on 13/12/2010 at 5:17 am

StanChart shares have fallen 6% since last Thursday when it told the market that costs were rising and wholesale banking revenues weak.

For StanChart, growth is proving costly. The British bank with a strong focus on Asian emerging markets said last Thursday that it had another record year to look forward to, predicting further growth in its pre-tax profit for both the consumer and banking wings of its business. However, such growth comes at a high price, and costs for the bank have been growing faster than it would ordinarily allow.

Its finance director said the bank would try to slow cost growth next year until it draws level with income growth once again.

Reminder: Temasek has 19% of StanChart and the bank is one of its best picks ever.

Calling all Muslims

In Property, S'pore Inc, Temasek on 01/12/2010 at 5:57 am

Sabana Reit needs yr help.

This is the first Shariah-compliant reit listed on the Singapore exchange (SGX), and the world’s largest listed Shariah-compliant reit by total assets. Looks like analysts were wrong to expect Sabana to attract Middle Eastern investors saying there are not many such Shariah-compliant REITs in Asia ( M’sia has three, and this is all it seems). Either they got no money, or there are more attractive investments elsewhere or in more lucrative products.

At yesterday’s closing price of 0.97  its first yr projected yield is now slightly more than the 8.22% at the IPO price of price of 1.05.

But it trades only at a “peanuts” 2 cents  above NAV of 0.99 in cash. But the properties to be injected in will only give an NAV of the 0.99.

For the time, being this infidel prefers AIMSAMP industrial reit which trades at a yield of 9.5% and an 18% discount to last published NAV. True gearing is at 35% versus Sabana’s 25%,: but the former has big Aussie insurer AMP as big brother, and the latter can only “borrow” from a limited number of “lenders” and via complicated structures. And I don’t have enough info to make judgements on its big brothers.

BTW looks like Temasek’s Mapletree industrial reit  has beaten this Shariah-compliant industrial reit performance-wise in IPO terms. They IPOed within weeks of each other recently.

Moral of the tale for pious folk of any religion: God may rule in heaven but on SGX, investors prefer to invest in a Temasek-linked reit, rather than a religious-compliant reit. The blasphemous (not I) may want to shout, “Harry rules OK” or “In S’pore, God takes advice from MightyMind”.

S’pore Inc:”Something this stupid generally requires teamwork”

In Corporate governance, GIC, S'pore Inc, Temasek on 01/12/2010 at 5:48 am

So said a senior American official, referring to a balls-up* in Afghanistan which showed the failure of British, US and Afghan intelligence.

“We have good growth; we have good plans and that is what we should be going into the election for – to mobilise people to support these plans and support the team which has brought this growth to them,” the PM said a few days ago.

But he forgot that there were two serious security goof-ups which proves twice over that “Something this stupid … requires teamwork”.

Mas Selamat climbed out of a detention centre, avoided capture despite taking refuge in his brother’s flat, and floated out of S’pore. Now anyone can do the first undetected, but the other two? And what odds all three consecutively? And if he can float out undetected, Pakis can float in, undetected, with explosives and illegal drugs.

And we had the SMRT depot break-in, that went undetected for days Given the threat of terrorism, S’poreans (and the authorities) were surprised that SMRT’s security was so lax. SMRT not an ordinary commercial company, it is also a GLC and TLC.

And then there were the PR damage limitation exercises that resulted from these incidents. They were so inept proving that “Something this stupid …  requires teamwork” comes. We had the CEO of SMRT (an FT from M’sia) blaming the public, and MPs being told by the Home Affairs minister that that Mas Selamat could go undetected in the flat “was not a security lapse’ and that hundreds were probed. What weed were they smoking? Or drug they were taking? Or what alcohol were they drinkng? Or what combination of these? Read the rest of this entry »

Property sales also fund our SWFs

In Economy, GIC, Property, S'pore Inc, Temasek on 19/11/2010 at 5:13 am

Did you know that when the government sells state land to property developers, the money flows into the reserves (which are managed by our SWFs)  and not into the Consolidated Fund like other government income?  This is uniquely S’porean. Other countries credit land sales to income.  The government’s rationale is that as state land is an asset, sale proceeds should not be credited to income but to capital (reserves). Makes sense, but that’s not how other governments account for land sales: even HK, and no-one can say that HK is badly run or profligate.

So when HDB “buys” land from the government it is adding to the reserves. As it and government claim that the price an apartment is sold does not reflect this price, they claim HDB makes a loss. But whatever it is (I leave it to others to dispute this claim), the reserves are increased.

So in addition to the surpluses (generated by thriftiness or meanness according to who is talking) and (indirectly via a circuitous route) our CPF monies https://atans1.wordpress.com/2010/11/02/how-we-fund-our-swfs/, sales of state land also contribute to the reserves that GIC, Temasek and the central bank manage.

There was one financial year ending March 2008 ( I think), where the government injected abt S$10 billion into Temasek. This sum was more or less equal to the amount that the government took in property sales for that year. Easy come, easy go as in the following yr Temasek could have lost as much as US$4.6bn (in 2009 March this would have been S$7bn) on Merrill Lynch. And there was the much smaller loss on Barclays (800m sterling?, then worth abt 1.7bn S$). Err not much change left over from injection: only S$1.3bn, “peanuts” as Mrs GCT might have put it, except she didn’t.

So this combination of surpluses, CPF money (indirectly via a circuitous route), and state land sale proceeds, have resulted in our SWFs having 179.5% more in assets than S’pore’s 2009 estimated GDP.

The Norwegian’s much larger fund (US$471bn) is only 23% more than Norway’s GDP. Abu Dhabi’s fund (at US$627bn) is 627% of its GDP. For those interested, I used FT’s US$248bn for GIC and US$133bn for Temasek. As to GDP numbers, I used CIA Fact Book as reference. (BTW, I’ve not taken into account the amt of foreign reserves that MAS manages because I could be double counting if I do. For the record, MAS says its reserves as at end 2009 are US$188bn).

So we got plenty of $ to make housing more affordable*. And there is no need to change constitution, or cut other expenditure.  Juz change the accounting rules on land sales.

BTW, I am working with an illustrator so that it is easier to visualise the connections between CPF, surpluses, Consolidated Fund  etc https://atans1.wordpress.com/2010/11/02/how-we-fund-our-swfs/ . Hope to post something one of these days. [Update on 4 December, the cartoon]

*Even after taking away our public debts; 8th in the world at 113.10% of GDP. [Update at 10.30 am]

How we fund our SWFs

In CPF, GIC, S'pore Inc, Temasek on 02/11/2010 at 5:42 am

This piece is an attempt* to answer,”If Singaporeans are not “hard-driving and hard-striving”, where did GIC and Temasek get so much money to lose?”: a posting on a Temasek Review article in late 2009.

The answer parroted mindlessly by the government is that government budget surpluses mean that GIC and Temasek get money to invest with.

A more detailed explanation has to start with how the surpluses arise.

As about 43% of the working population  don’t pay income tax, and VAT and other taxes are relatively low: one way the surpluses are generated is by a government being thrifty (government’s view) or mean (view of many netizens).

Economists in the private sector, and the Reform Party (the sec-gen was once an economist and he has a first-class degree from Cambridge) have argued that rather than accumulate large surpluses that are then invested abroad, the government should spend more building up Singapore’s human capital. By spending more on things like education, healthcare and consumer protection, the returns generated will be better than the returns on overseas investments.

This is an argument that has excellent academic credentials. China is often asked by eminent economists ,”Why do you export so much when you, in return, use the surplus lend to the Americans so that they can buy more from you?” The economists advise that China should invest more locally.

The government’s view is that Singapore needs the reserves as an emergency fund should things go badly wrong. The late Dr Goh Keng Swee talked of spending the reserves in a recession (as has happened recently). Dr Goh and others could also have quoted the example of Kuwait. When Kuwait was invaded by Iraq, the reserves were used to help pay for the war. And afterwards for the reconstruction of the country. They could also have cited Iceland and Dubai as countries that got into trouble because they ran out of $, when they could not borrow any more.

The second reason why surpluses occur is that our CPF monies are invested in special government bonds. The $ from the bonds flow into the government’s Consolidated Fund together with revenues from taxes etc. All government expenses are paid out from this fund. If there is a surplus (as there usually  because the government is thrifty or mean depending on who is doing the talking) part of that surplus can go to GIC and Temasek. The government argues that because all the monies in the fund  is fungible (cannot be separated), one is wrong to argue that CPF monies are invested abroad.

Technically and legally the government is correct, but so what is the retort? The financial effect (though not the legal consequences) is the same as if our CPF monies are directly invested abroad.

And these special bonds are the reason why S’pore is up there on a  list that the local media does not ever publicise. S’pore has the 8th highest public debt to GDP ration (113.10%) in the world. Greece is 7th with 113.40. Other countries on the list above us are Zimbabwe  (champion), Japan (second), Lebanon and Italy. Iceland is 9th (106.7) while Ireland is at 36 (57.7).

(Aside, could this high debt to GDP ratio be the reason why the govmin wants to force-feed GDP growth through immigration? I may explore this issue in future and I hope RP will explore the issue as something the electorate should be educated upon.)

Singapore is unique among the countries with the largest sovereign wealth funds. The other SWFs are effectively funded from oil revenues. In the case of Singapore, it could be reasonably argued, by government critics, that the funding results from the “hard-driving and hard-striving” Singaporeans who are forced to save and lend the money to the government; and from less than optimal government spending.

So the quote at the beginning of this piece has elements of the truth. And worse: one could reasonably argue that the government makes something for itself from “hard-driving and hard-striving” S’poreans.  One noted local economist has said that the government is effectively pocketing the difference between the returns it gets from investing abroad and the returns it pays on our CPF accounts: a carry trade arbitrage. Borrow low and invest for higher returns.

*What with an election coming, I tot I should revise (and repost) a piece I did in December last year. The revision has been pretty extensive.

Our SWFs juz lost S’pore S$685million

In GIC, Temasek on 22/10/2010 at 10:06 am

Mapletree Industrial Trust was up 25% from its issue price on its first day of trading while GLP (Global Logistic Properties) was up 11% on the first day of trading last monday.

For MIT, this meant that Temasek could have gotten S$300m more and GIC S$385m more for the GLP shares it sold. Not peanuts.

What this means is that the IPOs were priced badly. Ideally an IPO should open at a modest premium from the issue price. 5% would be fair.The investors make a modest profit, while the issuers get a gd price. So my S$685 is an exaggeration, the loss should be S$651m.

Now investment banks will always try to underprice issues because they want happy investors and don’t want to be stuck with unsold shares. Usually they get away with underpricing because issuers don’t know the intricacies of corporate finance. But Temasek and GIC are full of financial whiz-kids, or sure so we are assured.

But then maybe they gave away such a big discount because the money wasn’t theirs?

“It wasn’t that hard for me, just so you know. I made the decision to use your money to prevent the collapse from happening.”

– President George W. Bush, speaking at the University of Texas at Tyler on Tuesday night, via the On the Money blog of The Hill.

http://dealbook.blogs.nytimes.com/2010/10/20/quote-of-the-day-bush-on-the-700-billion-bailout/

If Siew Kum Hong had been been an NMP, I’m sure a parly question would have been asked. But the people-in-blue, “My wife is entitled to my seat” man and the NMPS are likely to remain silent. Our only hope is for one of the whites to ask the question.

India doesn’t trust our SWFs

In GIC, India, Temasek on 11/10/2010 at 4:31 am

Once upon a time, India deemed GIC and Temasek to be one entity and there was a 10% on the joint holdings of both in Indian companies. The Comprehensive Economic Co-operation Agreement (CECA) which was signed in 2005 provided that Temasek and GIC were to be recognised as separate entities, i.e. each is entitled to each own up to a 10%  stake in a company.

There is a report in an Indian newspaper that the Securities and Exchange Board of India (SEBI) has ordered  that both Temasek and GIC could only own up to a combined 15% stake in a company, or takeover rules would be triggered.

Can you blame one MM for once being sceptical abt investing in India?

StanChart a takeover target?

In Banks, Emerging markets, Temasek on 22/09/2010 at 5:24 am

(Updated on 13 October)

No not Temasek as predator. Remember it has 18% of StanChart.

But what abt JP Morgan? Top FT reporter Francesco Guerrera analyses

The international conundrum is more complex. JPMorgan earns some 75 per cent of its revenues in the US, a slow-growing, developed country. By contrast, Citi derives some 40 per cent of its revenues from Latin America and Asia, emerging economies with a bright future that are also HSBC’s stomping ground.

Those lenders’ competitive advantage is their ability to offer boring-but-lucrative commercial banking and cash management services to thousands of companies.

JPMorgan has a deep commercial banking network in the US – its most profitable business – but lags overseas.

The bank already works with more than 2,000 foreign companies but Mr Dimon would love to get that number to nearer 4,000 and do more with each of them.

To this end, JPMorgan is adding 250 bankers and $50bn in extra lending to lure foreign companies. But that could take decades and the bank might want to shorten the wait with bolt-on acquisitions (as its investment bank did with Britain’s Cazenove and RBS Sempra).

The recent moves by Heidi Miller, a veteran executive, to lead the international effort, and Doug Braunstein, a takeover specialist, to the role of finance chief, certainly point in that direction.

But, as my GPS intones when I get lost, “there is a better way” – in theory at least – and it leads to Standard Chartered.

A well-run, commercial and retail bank with strongholds in Asia, Latin America and Africa, StanChart could be the answer to Mr Dimon’s problems.

It would not come cheap – its valuation is well above JPMorgan’s – and a bid by Mr Dimon would trigger a war with HSBC and China’s ICBC, among others.

But JPMorgan’s good health affords its chief the luxury of time.

On 12 October 2010, StanChart was up 2% on rumours that JP Chase would bid.

Temasek: Financial engineering STATS

In Private Equity, Temasek on 15/09/2010 at 5:11 am

STATS ChipPAC, a chip-tester, recently raised US$600m. As STATS is undergoing a recapitalisation exercise, this means the $ will go to shareholders. Temasek has 81% of STATS.

Glad to see that that Temasek is using a private equity “trick” to enhance its returns. Borrowing money and using the loan proceeds to return $ to shareholders.  Every little bit helps post the losses on Shin, ABC Learning, Merrill Lynch and Barclays.

Maybe Straits Trading should try this “trick” as a way to reduce the the loans that Tecity is alleged to have taken out to fund its controlling stake in ST. It owns over 70% of ST and ST has lots of solid assets that would provide gd security for the loans.

But borrowers have to be careful. It’s OK if the borrower’s controlling shareholder is a SWF but not if is juz a family company. Cash flow projections may be wrong,  or bonds may mature at the wrong time.

StanChart: Getting too aggressive?

In Banks, India, Temasek on 10/09/2010 at 5:11 am

Is Standard Charterd (which like HSBC) had a good crisis taking on too much risk? We shld care as Temasek owns 18% of StanChart, and StanChart  is one of its best performing investments.

Ranked 14th among merger advisers in India in 2009, StanChart is now number two (and could be soon Numo Uno) by financing takeovers in the world’s second-fastest growing major market for M&A deals, Bloomberg reports.

The problem is that in the 1980s and 1990s, major US investment banks  and European universal banks  got into serious trouble by financing takeovers in the US. The deals went sour when the economy collapsed. The banks had tot financing takeovers was a gd way (“no brainer”) of getting into the lucrative M&A game.  They forgot that these loans are margin financing by another name.

Is StanChart repeating the same mistake?  Maybe it thinks India’s economy may never collapse. But never take for granted anything about a country that needs “divine help” to get ready for the October Commonwealth Games.

GIC: a problem at Citi

In Banks, India, Temasek on 08/09/2010 at 5:49 am

Some analysts and accounting experts (among the latter Lynn Turner), a former chief accountant at the Securities and Exchange Commission,  say Citi must set aside funds to cover US$50bn of deferred taxes.

These assets  are important to Citi. At the end of the second quarter, deferred tax assets made up more than a third of Citi’s tangible equity. So if he had to set aside funds, this would reduce its capitalratios and weaken its balance sheet.

To avoid setting aside funds, Citi has to be confident it will earn US$99bn in taxable income during the next two decades. It says it can.

However as  its pre-tax losses in 2008 and 2009 topped US$60bn, these critics ask why it should be trusted.  They have a point, while between 2002-2006 period Citi had annual pre-tax profits of at least US$20bn, this got wiped out by the recent losses.

Err so will this “30-yr” investment be around in 30 yrs time, let alone make money for GIC, as MM predicted? Remember Temasek cut loss on its Merrill Lynch investment, after doubling down, and juz before market turned.

S’poreans, Temasek may have a problem

In Banks, China, Temasek on 03/09/2010 at 6:52 am

Of the 90 publicly listed Chinese property developers listed on the Shanghai and Shenzhen stock exchanges, almost two-thirds of them reported negative operating cash flows for the first half of 2010.

This makes clear why the Chinese authorities had earlier asked the banks to use a 60% haircut in estimating residential property  losses.https://atans1.wordpress.com/2010/08/11/temasek-what-abt-these-chinese-property-charts/

Looks like trouble for the Chinese property developers and banks may be coming sooner than later, and for China bank bull Temasek. A repeat of Merrill Lynch and Barclays?

Remember Temasek owns 4% of Bank of China; and 6% of  China Construction Bank. And StanChart is a cornerstone investor  in Agricultural Bank of China with abt 1% paying US$500m for this privilege). Temasek owns 18% of StanChart.

And what about CapLand and KepLand, with their biggish exposure to Chinese residential properties?

Sigh

Dogs? Temasek’s Chinese bank investments

In Banks, China, Temasek on 26/08/2010 at 5:15 am

Might sound dumb to ask given that the Chinese banks that Temasek invests in are some of the largest in the world, and given that China’s economy is growing like the bean stalk in the story Jack and the Bean Stalk.  But then Shin, Merrill Lynch and ABC Learning were “no brainers”.

State agency Central Huijin Investments did something strange recently. It has controlling stakes in nearly all of China’s largest banks, including China Construction Bank (6% owned by Temasek), Agricultural Bank of China (StanChart is a cornerstone investor with abt 1% paying US$500m for this privilege) and Bank of China (4% by Temasek) . Temasek owns 18% of StanChart.

Huijin just raised Rmb40bn (US$5.9bn) as part of  a Rmb187.5bn fund raisng. The aim of raising the Rmb187.5bn is to recapitalise  Chinese banks it controlled.

Sounds prudent given the explosive loan growth rates of the banks brought about by Chinese attempts to stimulate the economy.

But this is the weird bit: the state-controlled banks were estimated to have bought more than 80% of Huijin’s first bond issue, on orders from their shareholder. If this is repeated, this means the Chinese banks are lending money to their controlling shareholder so that the shareholder can buy shares in them.  No new cash is invested by the controlling shareholder.

Sounds something that only Wall Street cowboys would dream of doing.

Except that the Wall Street cowboys would be in jail for pulling off this stunt, unless of course, if a Texan is president.

Temasek, CapLand: What abt these Chinese property charts?

In China, Property, Temasek on 11/08/2010 at 5:15 am

Courtesy of this blog. And look at the money supply charts too.

No wonder China’s banking regulator told lenders last month to conduct a new round of stress tests to gauge the impact of residential property prices falling as much as 6o% in the hardest-hit markets. Banks were instructed to include worst-case scenarios of prices dropping 50- 60% in cities where they have risen excessively. Previous stress tests carried out in the past year assumed home-price declines of as much as 30%.

Expectations seem to be for a sharp decline in Chinese property prices over the next two years, with some, and perhaps significant, impact on Chinese banks.

Some time back it was reported that Temasek had emerged as one of the top 10 acquirers in the Greater China region,

after doing six deals worth US$1.47 billion since 2005. According to a market M&A report commissioned by Deloitte, Temasek is ranked No 9 – after Morgan Stanley and Goldman Sachs, which are No 7 and No 8 respectively. The report Read the rest of this entry »

What abt High Notes SM Goh?

In Banks, Temasek on 06/08/2010 at 5:22 am

The central bank has given DBS Bank an unprecedented public censure and instructed the 27%-owned Temasek bank to put aside S$230m  to cover its operational risks. Gd for MAS, and SM Goh (chairman of MAS), Tharman and Hng Kiang. The last two ministers also sit on MAS’ board.

There is another thing to be put right, SM, Tharman and Hng Kiang.

DBS’ Hong Kong unit recently agreed to pay out HK$651 million or about S$115 million to some clients who bought products linked to Lehman Brothers. As HK$1.3 billion of notes were sold, the compensation received works out to 49% of amount invested.

In S’pore, it sold a similar product, HN5 Notes. DBS issued, arranged and distributed HN5. A total of S$103.7 million worth of HN5 were sold to 1,083 retail clients between 30 March and 30 April 2007, according to a July 2009 MAS report.

The same report said DBS compensated investors S$7.8 million.

What this works out to is 7.5% of amount investments versus 49% in HK. Is this fair? Product is the same.

Force DBS to treat the S’porean investors fairly,  ministers. You have the moral authority.

If you do, I’m sure the compensated HN5 investors, family and friends will remember the good deed when the GE comes. It’s “win, win” except for DBS. And even then its a peanutty S$51m, 44% of amount paid to the HongKies.

BTW I did not buy any of the credit-linked notes that failed. Not that “greedy”.

Related post

https://atans1.wordpress.com/2010/07/15/dbs-another-case-of-discrimination-against-locals/

Swee Say said that gd Temasek lost billions?

In Banks, Temasek on 04/08/2010 at 5:27 am

Cabinet minister and NTUC’s Secretary General Lim Swee Say  is confident that Singapore will be able to replenish the S$4.5 billion drawn from the reserves over two to three years. He said  Singapore makes sure that every dollar is put to good use and every extra dollar is put back into the reserves.

So is he saying the realised losses on Merrill Lynch (may have totalled US  $4.6 billion) and Barclays (possibly 800 million pounds)  were a good use of the reserves? BTW they total S$8bn at today’s rates. Almost more than double the amounts drawn down for WorkFare.

More to the point, how long will Temasek need to make up for the losses on just these two stocks? Remember its profits have fallen two years running.

Temasek: China banks’ loans

In Banks, China, Temasek on 31/07/2010 at 7:14 am

Chinese banks may struggle to recoup about 23%  of the Rmb7,700bn (US$1,100bn) they’ve lent to finance local government infrastructure projects . reports Bloomberg quoting “a person with knowledge of data collected by the nation’s regulator”.

The estimate implies US$261bn of debt will go bad, almost five times the US$53.5bn the nation’s five largest banks are raising to replenish capital. Remember Temasek owns 4% of Bank of China and 6% of China Construction Bank, both of which have raised more capital from shareholders.  And 18% -owned StanChart  invested $500 million in Agricultural Bank of China’s recent IPO.

If the estimate proves even a bit correct, Temasek will be having to invest more in the next few years  to avoid dilution.

Related post

https://atans1.wordpress.com/2010/02/08/tlcs-in-china-groupthink-or-mastermind-at-work/

Temasek: Shale gas is a long term investment?

In Energy, Temasek on 27/07/2010 at 5:37 am

Taz at least to Exxon’s CEO talking of Exxon’s investment in XTO Energy.

And Exxon, the oil & gas major usually gets these things right. Remember it takes up to 30 years to develop a major oil or gas field.

Temasek doesn’t have such a long-term horizon. Remember its “long-term” investment in Merrill Lynch?Lasted slightly more than a yr, and it cut loss, juz as the market was turning, and top hedgies were buying into BoA (buyer of ML). Read the rest of this entry »

Temasek: Smarter than Yogi Bear?

In Temasek on 22/07/2010 at 8:29 am

In my last post, I speculated that Temasek raised sterling bonds because it might want to buy an oil minor. Read the rest of this entry »

Temasek: Why raise £? Buying oil minor?

In Energy, Temasek on 21/07/2010 at 6:18 am

Temasek, which had previously issued bonds only in US and Singapore dollars, sold £200m of 12-year bonds and a further £500m of 30-year debt.  The 30-year bonds were popular  with British pension funds because there is a shortage of long-term UK debt.

The 12-year bonds were priced at 95 basis points above UK government bonds, while the 30-year paper yielded an extra 90bp over gilts.

Temasek declined to comment on the rationale for the sale, the wires and FT quoted people close to the deal saying it was a move t obtain relatively cheap long-term funding, diversify its investor base and  borrowing profile.

There has been speculation that Temasek would invest in BP. The fundraising was not linked to any new investments in the UK, according to people familiar with the matter, the wires and FT reported.

But could Temasek be interested in a small London listed oil & gas company? It is interested in the energy sector. Read the rest of this entry »

Cambodia: There be value?

In Emerging markets, Temasek on 17/07/2010 at 7:20 am

Representatives of large US corporations, including General Electric, Johnson and Johnson and JPMorgan visited Cambodia to discuss the potential for future investment.

Few mths back, I heard Temasek is sniffing around too.

Note there is no stock market here yet.  One was supposed to start last year.

Temasek: Results Analysed

In Temasek on 08/07/2010 at 6:15 pm

Gd balanced coverage, here and http://www.temasekreview.com/2010/07/08/temasek-holding-another-unintentional-omission-by-straits-times/ And here [Update on 8 July]

But disappointed that no-one pointed out that the difference in the previous portfolio high in FY2008 and the latest high FY2010  is a measily o.5%. And this when net profit is down 2 yrs in a row, which again, no-one pointed out: FY2009’s profit was only 33% of that of FY2008 (S$6bn v S$18bn) and there was another 26% fall between 2009 and 2010.

GE: Opportunities beyond China

In China, Temasek on 07/07/2010 at 5:31 am

Jeffrey Immelt, General Electric’s chief executive, has launched a rare broadside against the Chinese government, which he accused of being increasingly hostile to foreign multinationals.

He warned that the world’s largest manufacturing company was exploring better prospects elsewhere in resource-rich countries, which did not want to be “colonised” by Chinese investors. “I really worry about China,” Mr Immelt told an audience of top Italian executives in Rome, accusing the Chinese government of becoming increasingly protectionist. “I am not sure that in the end they want any of us to win, or any of us to be successful.” Mr Immelt acknowledged the importance of the Chinese market, which contributed $5.3bn to the group’s revenues last year — FT.

But US$5.3 bn is a peanutty 3% of 2009 revenues, and China will always need natural resources, so his plan to do without China is credible, unlike Google’s*.

Hmm maybe, China-fixated Temasek and its TLCs can learn from this? In their case, diversify away from China without losing the opportunity cost of not investing direct in China. Get what I mean?

Temasek Gp are big in China

https://atans1.wordpress.com/2010/02/08/tlcs-in-china-groupthink-or-mastermind-at-work/

Mentality of China bulls

https://atans1.wordpress.com/2010/03/12/understanding-the-mentality-of-china-bulls/

*But Google has a cunning plan to use Android to soften losses on search in China. Never count Google out.


Why GIC and Not Temasek?

In GIC, Temasek on 05/07/2010 at 5:20 am

Norges Bank governor Svein Gjedremwas in Singapore to open an office of the central bank unit that runs the Norwegian SWF. It is the fourth office outside Oslo after London, New York and Shanghai. It will have 10 staff in Singapore to manage a portfolio of  about US$1.5 billion in assets.

He said in a lecture at the Singapore Management Universit he was looking for an opportunity to work with one of Singapore’s two sovereign funds, the Government Investment Corp of Singapore, to develop investment strategies for Singapore and elsewhere, according to BT.

Hmm, is Temasek too cowboyish for him? GIC came out ahead on its Citi investment,and while UBS is still an investment that lost value, UBS is still around, unlike Merrill Lynch where Temasek doubled down its bet. and Temasek cut its losses on Barclays, and BoA (the buyer of ML), just before markets turned?

Norway’s SWF’s performance https://atans1.wordpress.com/2010/04/30/our-swfs-what-our-mps-are-not-asking-ii/

Temasek GIC ignoring Qatar’s ideas?

In GIC, Temasek on 04/07/2010 at 10:44 am

For example, when the Qatar Investment Authority is considering investments, “Government of Singapore Investment Corp and Temasek are our first ports of calls,” says one QIA executive. The QIA invested alongside CIC [China’s premier SWF] in Canary Wharf, beginning a dialogue which executives say they intend to continue, FT reports.

Don’t recall any deals where GIC, Temasek co-invest with Qatar. Temasek, GIC giving Qataris the cold shoulder despite their better track record?

FT continues:

Moreover, these funds are becoming more discerning – since they have learned who is trustworthy, by virtue of making some expensive mistakes. For example, there is still a lot of bitterness about representations made when executives of Citi and Merrill Lynch (now part of Bank of America) sought rescue funds. “They were like used car dealers,” says one leading investor in the Merrill deal bitterly, referring to the dialogue with that firm.

When those rescue financings were first made, some sovereign investors in these deals were able to extract better terms than others, including anti-dilution provisions and the right to reset terms while others did not. Recently, KIA and GIC were able to partly salvage their investments by changing the terms, while Temasek disastrously sold its stake in Bank of America at the absolute bottom in February, locking in a multi-billion loss (in spite of the advice of some of its peers not to do so).

Those bitter experiences have not prompted the funds to entirely abandon their investments in the US. When Larry Fink needed to raise billions to help finance BlackRock’s purchase of Barclays Global Investors earlier this year, he was able to raise the money from GIC, CIC and the KIA in less than a day because they all know and trust him.

Qatar can teach Temask, GIC the value of patience

In GIC, Temasek on 04/07/2010 at 6:18 am

When GIC and Temasek did the mega banking (UBS, Merrill Lynch, Citi) deals in late 2007, early 2008, they faced competition for these investments. UBS shareholders were even upset that UBS did not call for a rights issue because they tot GIC had got a sweet-heart deal. So did GIC when it (and many other reputable investors) funded the purchase of rent-control premises in New York. We know what happened there.

Despite having a lot more money (derived from oil and not the savings and hard work of the people), Qatar was a lot more cautious than GIC, Temasek and to be fair to our SWFs, other Arab SWFs, not to say the Chinese SWFs. Only the Norwegians may have been more cautious.

So last yr, as Qatar’s Sandhurst-educated ruler, Sheikh Hamad bin Khalifa al-Thani, put it last year: “With the current crisis, many countries prefer to keep their money instead of investing it abroad. For us, though, this is an opportunity that will not be repeated in the next 20 years.”

Now lots of London is owned by Qatar.

Maybe we need FTs who are patient to advise us. Not FTs who are like us: impatient to get things done.

Oh and in October 2009 Qatar Investment Authority made a £600m profit on the exercise and sale of Barclays warrants, while retaining the other half of these instruments plus a direct 7% shareholding in Barclays. They made the investment in late 2008 and must have felt sick when in January 2009, when Barclays’ share price fell to 50p. Shortly thereafter Temasek exited from its Barclays investment made in 2007. To this day, no-one is sure how much it lost.

But all those who castigate Temasek and GIC (e.g.websites allied to Dr Chee and his SDP) for not being transparent should note that the Qatar Investment Authority does not publish an annual report.

BTW, this lady has no MBA, she dropped out of uni. But she advises the Qataris. A lesson for our SWFs?

Temasek: Vindication of its big bet on shale gas?

In Energy, Temasek on 16/06/2010 at 5:23 am

We’ve analysed that Temasek ignored MM’s warning against extractive industries (OK “mining” to be precise) when it went into shale gas https://atans1.wordpress.com/2010/05/21/temasek-ignoring-mm-iii/

The news sometime back that Shell is paying US$4.7bn for a shale gas firm confirms that Temasek and other SWFs are correct. Err except that the seller, private equity firm KKR, is reported to have paid US$350m juz 11 mths ago for a “significant minority interest”.  KKR invested via debt convertible into equity.

So jury is out on whether Shell, Temasek, etc. are bubble blowers and buyers.

One wishes Temasek were ahead of the curve (StanChart, Indonesian telcos, Asian banks) instead of being in the middle (hopefully — like the Chinese banks*) or at the back (Merrill Lynch, Barclays, ABC Learning, Shin: anything else?)

There are reports that Temasek will be a keystone investor in the AgriBank of China. If true this will be the third major investment in a Chinese bank. The other two have been good investments.

DBS FTs: balls-up on top of cock-up?

In Banks, Corporate governance, Temasek on 15/06/2010 at 5:53 am

Islamic finance is set to play a bigger and more central role in global finance. This is because of greater awareness and adoption in more financial centres.

Trade and Industry Minister Lim Hng Kiang said this at the launch of the inaugural World Islamic Banking Conference Asia Summit in Singapore on Monday.

So why is DBS cutting back on the activities of its Islamic banking activities?

https://atans1.wordpress.com/2010/05/26/dbs-fts-goofed-again/

Temasek should sort out the “FT is best policy” that dominates the thinking at DBS. It is on its 6th FT CEO in a row. It’s costing Temasek (and ultimately us) shareholder value.

Remember it was an FT that overpaid for Dao Heng Bank, and messed up the takeover of OUB.  And the loss in market share in retail banking, so much so that the ex-CEO of PosBank has been brought back as adviser.

Other cock ups

https://atans1.wordpress.com/2010/05/14/dbs-fts-balls-up-contd/

SWFs: S’pore v Korea

In GIC, Temasek on 05/06/2010 at 5:16 am

Much more than Korea certainly.  The minister of finance said that the success of S’pore is due to S’poreans’ efforts.  More to the point the $ in our reserves are due to the recycled savings of Singaporeans https://atans1.wordpress.com/2009/12/26/where-gic-and-temasek-gets-their/

“Korea’s total foreign exchange reserves are about $280bn so it is only putting about 10 per cent into KIC*,” says Mr Kalb**. “Compare that with Singapore where the central bank keeps $150bn in liquid reserves and yet [of the country’s two SWFs] GIC is tasked with managing $250bn and Temasek $100bn.” $ = US$

*Korea Investment Corporation:  (Korea’s SWF)

** KIC’s CIO

Our SWFs: Another question our MPs should be asking

In GIC, Temasek on 04/06/2010 at 9:56 am

Some state pension plans have not adjusted their risk premium either since the financial crisis. They expect their equity portfolios to earn them more than 8% per year, a risk premium a bit larger than 5%. The state plans also have no incentive to lower their equity premium. If they do, their projected assets will fall and liabilities will rise. This means their funding ratios will plummet and they will have to start making larger contributions to the plan, which would likely mean higher taxes.

(Taken from link in previous post)

Our MPs should be asking if Temasek’s and GIC have adjusted their risk premiums. Remember the constitution has been changed to allow more of the returns from reserves to be used. Somehow I feel the people-in-blue will be the men-in -white clones on this issue. And our NMPs will not take up the slack. Miss Siew Kum Hong. Feminists and GLBT, you people shouldn’t have made him yr poster boy.   As for PAP MPs, what would you do to a dog that bites the hand that feed him or her unprovoked? Yes shoot the dog.

China: a problem S’pore doesn’t have

In China, Economy, GIC, Temasek on 31/05/2010 at 6:03 am

It’s labour unrest . Add another entry to the list of worries for the global economy and financial markets: labor unrest in China — NYT

I sure hope Temasek andits TLCs who have big bets in China have taken this into account. Remember, we don’t do”labour unrest” here.

https://atans1.wordpress.com/2010/02/08/tlcs-in-china-groupthink-or-mastermind-at-work/

https://atans1.wordpress.com/2010/02/09/why-my-obsession-with-tlcs-in-china/

Err time for Lim Say Swee to lecture the Chinese leaders on what they can learn from MM Lee and him on how to keep the workers docile?

Why S’poreans should miss Chips

In Corporate governance, Temasek on 31/05/2010 at 5:38 am

Temasek last week annced a new president and portfolio team head.  We shld be glad that Temasek did not succumb to its flagship bank’s “FTs are best whether they perform or not”.

But let’s get serious. Let’s use this annc of personnel changes to reflect on why the departure of one Goodyear Chips could affect us.

Many moons ago (February I think)  BT carried an article that backhandedly criticised Chip Goodyear saying that despite his sudden, unexplained departure from Temasek, he is still in demand from the corporate worl.  (Can you see the spin for Temasek in this SPH publication, whose chairman is executive director of GIC?)

And well he should be in demand.

When he was hired to be CFO of Melbourne-based miner BHP in 1999, the “Big Australian” had lost its way.  In the 1990s, it made a series of ill-conceived acquisitions and failed projects (err sounds like you-know whom’s recent record of Shin, Merrill Lynch, ABC Learning and Barclays), amid historically low commodity prices.

The then former investment banker (he was a CFO at another miner) was one half of an all-American dynamic duo (Sorry, I’m a Batman fan). The other was CEO Paul Anderson, who came from Duke Energy.

In their first two years, BHP got rid of 2,000 employees and A$6.9bn worth of assets. They then merged BHP with Billiton, creating the world’s biggest miner. And best of all the merger worked, a rarity in M&A.

A key legacy of his stint as CEO, analysts say, is the financial discipline he brought to BHP. He ensured it grew fast enough to capitalise on the commodities boom while avoiding the ill-conceived spending of the past; and all the while,  returning cash to shareholders. A tradition that has continued.

Shortly after he took charge as CEO,  it was announced that BHP would increase its capital management programme by more than four times to US$13bn, beginning with a US$2.5bn off-market return in Australia.

With the Singapore government tapping the reserves, someone with a track record of returning  cash to shareholders while growing the portfolio is needed.

There is no Singaporean with these skills.

And as to the disagreement with the board, maybe he wanted to do big deals, while the board had already decided Temasek should become a hedgie.

And maybe his deals would have been in the extractive industry (mining and oil & gas). Remember MM had said GIC would not invest in mining ventures, because he didn’t understand mining? Though now that Temasek is dipping its toes in mining and oil & gas, Chips and the recently departed Michael Dee (ex-Morgan Stanley’s MD in oil town Houston) would be missed.

AIA takeover is nuts, PRU shareholders advised

In GIC, Insurance, Temasek on 26/05/2010 at 6:45 am

RiskMetrics, an international share proxy advisory service, issued a critical assessment of the AIA takeover bid, saying while a deal had “a sensible strategic rationale”, Prudential was paying a heavy price.

FT reported that RiskMetrics said Prudential was paying US$35.5bn for a company with US$1.6bn in post-tax operating profits.

“For this to work, profits have to grow substantially beyond the expected cost synergies. Our analysis indicates that Prudential needs very high growth rates at AIA to only meet a reasonable return on invested capital, something that seems a stretch when managing a difficult integration process.”

Let me know when our local media report this story.

BTW GIC’s interest in this stock shows that its analysis is different: it is willing to forgo jam today for  jam tomorrow (maybe).  Hmm must be MM’s 30-yr view at work. Wonder who is right.  Remember shortly after he last said this , Temasek sold its BOA stock, just before the market recovered. GIC held on to its UBS and Citi investments.

DBS: Another FT goof

In Banks, Temasek on 26/05/2010 at 5:53 am

Now it’s the Islamic Bank of Asia. Reading between the lines of the MSM spin, clear that its Islamic bank foray ran into serious problems. It now wants to focus on investment banking and become more active in private equity while remaining committed to growing its Islamic banking franchise in this region. And cutting back on financing because of losses when financing Gulf cos.

Sounds a bit like Aztech and Novena: having failed in what they were doing, they tried something new. “So easy meh?”

Why can’t Temasek exercise its prerogatives as controlling shareholder and get rid of the FTs. I mean the locals at CapitaLand are doing a gd job in Islamic financing. Juz being an FT doesn’t mean the right to “Fail, try again, fail harder” ; misuse of a misquote of Samuel Beckett.

Temasek itself is hiring locals in senior positions, ignoring the “FT is best policy” .

OK maybe I’m hard on the FTs at DBS https://atans1.wordpress.com/2010/05/14/dbs-how-to-solve-the-ft-problem/

But at the very least, they do not have the luck that Napoleon expected his generals to have. He expected his generals to be brave, competent and leaders as given in his meritocratic army: but luck was different.

Backgrounder on Islamic Bank of Asia

DBS owns 50 per cent plus one share in IB Asia’s capital of US$500 million.

The rest was contributed by investors from the Gulf Cooperation Council countries – Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates.

IB Asia said at the time [of its establishment] that it would offer commercial banking, corporate finance and capital market and private banking services, acting as a bridge for capital flows between Asia and the Middle East. (From BT)

Founding CEO retired last December. I’m not sure before or after Dubai World declared a debt moratorium causing problems for other Gulf companies.

Temasek: MM Lee being ignored? II

In Energy, Mining, Temasek on 17/05/2010 at 10:39 am

No not again. Temasek does another natural resources deal, it was reported last week.

Temasek and Hopu Investment Management, a Beijing-based firm, are to spend more than US$1bn to acquire a stake in New York-listed Chesapeake Energy; a US producer of natural gas from shale rock. They follow other foreign investors into the sector.

They  agreed to buy US$600m of convertible preferred stock and have an additional 30-day option to acquire a further US$500m of the stock, which they are “highly likely” to exercise alongside other investors. Bloomberg reports.

Cynics must be wrong to continue believing that the government (and MM lee in particular) controls the decision-making process at Temasek.  Temasek has the independence to do the wrong things. Bit surprising that Temasek’s PR machine does not highlight this. Are there subversives in the PR department that want to hide the truth of the relationship between Temasek and the government from the public. Friends of SDP and Dr Chee?

But still, one would have tot Temasek would listen to someone whom Time magazine rates as among the 100 most influential  persons in the world. Sigh, reminds me that somewhere in the bible there is something about a prophet being without honour in his own home.

https://atans1.wordpress.com/2010/04/05/temasek-mm-lee-being-ignored/

Let’s hope that the Fates do not punish the hubris of Temasek’s management. We lose.

BTW three mining deals you may not be aware of

It agreed to buy a peanutty US$50 million stake in the January share sale in Hong Kong by SouthGobi Energy Resources Ltd., a coal producer operating in Mongolia.

It provided funding for Niko Resources Ltd.’s $300 million acquisition of Black Gold Energy LLC. Temasek bought the C$310 million convertible bonds issued by Niko, the Calgary-based oil and natural-gas explorer said in a statement on Dec. 30.

And it bought 382,000 additional shares in  Freeport-McMoRan Copper & Gold Inc., the world’s largest publicly traded copper producer, in the first quarter, according to a recent filing with the SEC. Based on a closing price of US$70.24, that additional investment was worth about US$27 million, “peanuts”.

Update 18/5/10

According to a Reuters report, it has also recently bot C$500 million in Inmet Mining and a peanutty US$50 million in Platmin over the past two months.

*

StanChart: Who would have tot?

In Banks, Emerging markets, Temasek on 16/05/2010 at 6:21 am

Standard Chartered expects Indian profits to exceed HK for the first time next year, Richard Meddings, finance director, told the Financial Times. Hard to believe as HK is its core market.

But then StanChart executives, including Peter Sands, the group’s CEO, were in Mumbai to announce that the bank had obtained regulatory approval to become the first foreign company to list on an Indian stock exchange.

So a little cynicism is in order?

Seriously, Temasek with 19% of StanChart, must be commended for investing in a bank that now has as its two major markets, HK/China and India. Makes up for that FT dominated mongrel, DBS. Time to strip DBS to a local retail bank, and rename it POSB? Who needs one Asian champ and one Asian chump?

Update

When you think about it,  Temask’s banking strategy (Asian prong: stakes in two major Chinese banks, StanChart, and in Asian banks in Indonesia, M’sia, Pakistan etc) worked. Where it went wrong badly was in its Western investment banking  strategy buying into Merrill Lynch and Barclays and cutting its losses when the hedgies were buying.)

Moral of story, something Dr Goh could have warned them against: “Ang Moh tua kee” strategy does not work.

Our SWFs: Learning from the Arabs III

In GIC, Temasek on 13/05/2010 at 6:16 am

A new person helps, after a bad performance patch, even if the those replaced cannot be faulted.

Ahmad al-Sayed became chief executive of Qatar Holding in October 2008.  And it has tried  to take advantage of the financial crisis by picking up stakes in Barclays, Credit Suisse, Porsche, Volkswagen and Canary Wharf Group. And now buying the whole of Harrods.

Qatar Holding is the prime vehicle for strategic and direct investments by Qatar and is a division of the Qatar Investment Authority, founded in 2005 to diversify the emirate’s assets away from oil and gas.

Related post

Suggestion on how to motivate GIC, Temask staffers

https://atans1.wordpress.com/2010/04/18/motivating-the-elite-learning-from-n-korea/

Our SWFs: Learning from the Arabs II

In GIC, Temasek on 12/05/2010 at 12:29 pm

What the Qataris are planning to do with Harrods shows an “adding value” mindset, rather than a passive attitude

FT reports: Qatar Holding is considering whether to launch a flagship Harrods outlet in Shanghai following its £1.5bn purchase of the London department store this weekend.

Trying to replicate the success of Harrods’ Knightsbridge store overseas is one of four areas now up for discussion as part of Qatar Holding’s three-month strategic review of the business.

Ahmad al-Sayed, chief executive of Qatar Holding, will also investigate developing a luxury online store, expanding the Harrods brand beyond teddy bears and souvenirs for the mass market, and giving the London flagship store a makeover in order to expand the selling space.

Of course owning all of a private investment helps. Maybe Temasek should be more aggressive in pursuing non-listed companies.

Our SWFs: Learn from the Arabs?

In GIC, Temasek on 12/05/2010 at 5:39 am

Ahmad al-Sayed, chief executive of Qatar Holding, told the Financial Times that the acquisition of Harrods was part of a strategy to acquire “prestigious top-performing businesses and to buy them at the right point in the cycle”.

Qatar Holding is the primary vehicle for Qater’s strategic and direct investments. It is an arm of Qatar Investment Authority (QIA), which was founded in 2005 to strengthen its economy by diversifying into new asset classes.

Temasek’s investment strategy centres around four themes:

• Transforming Economies

– We invest in industry sectors that correlate with the economic transformation of the country

• Growing Middle Income Populations

– We find opportunities in companies and industries whose growth is fuelled by the increasing purchasing power of middle income populations

• Deepening Comparative Advantages

– We tap the potential of competitively-positioned companies

• Emerging Champions

– We identify companies proving to be best-in-class, be it regionally or globally.

GIC simply says, The group strives to achieve good long-term returns on assets under our management, to preserve and enhance Singapore’s reserves.

Note nothing about trying to time investments. Maybe thaz why they messed up big-time on Merrill Lynch, Citi and UBS. Even MM admitted that much saying they went into too early into financials.

Now Qatar’s  track record is not that great either: but at least it sets out a benchmark on which it can be judged.And it shows it is aware of the importance of timing.

BTW a lot of Buffett’s skill is in knowing when to be greedy.

GIC’s strategy is

Temasek: Another banking success

In Banks, Emerging markets, Temasek on 06/05/2010 at 3:41 am

Temasek owns 19% of Standard Chartered. Standard Chartered has said that it made record profits and income in the first three months of 2010.The London-based bank, which operates mainly in Asia, said that it “remains in excellent shape”.

It  did not release profit figures for the quarter, but the remarks in its trading update point to a strong 2010. “Overall, the group has had a very strong start to the year, despite margin headwinds and increasing competitive pressures”.

In the first half of 2009, Standard’s profits were a record US$2.84bn (£1.86bn), suggesting profits for the first quarter of that year of about $1.4bn.

The  comment that it had “a record quarter in terms of both profit and income” for 2010 indicate it could beat these figures when it reports half-year results later in the year.

Wholesale banking, which includes advisory, trade finance and other investment banking business, saw client income rise by more than 20% on the first quarter of 2009 and contributed more than 80% of wholesale income, the bank said in its statement.

Wholesale banking has driven Standard Chartered’s growth in recent years and accounted for over 80% of group profit last year.

Temasek: Update on its China bank investments

In Banks, China, Temasek on 05/05/2010 at 5:49 am

As readers will be aware Temasek has strategic stakes in Bank of China (4%) and China Construction Bank (6%), two of the four biggest Chinese banks.

These investments have done well, but need cash because of the loans they were directed to make last year, when China wanted domestic demand to make up for weak exports. https://atans1.wordpress.com/2010/04/14/temask-profitable-holdings-require-more/

China Construction Bank has announced a plan to boost a balance sheet that has been eroded by a year-long lending binge. The world’s second-largest lender by market value, plans to raise up to Rmb75 billion (US$11 billion) from a rights issue which, if successful, will be the largest offering of its kind in Asia.

CCB will offer 0.7 rights share for every 10 existing A- and H-shares. The price will be no more than Rmb4.50 per rights share, according to a stock exchange filing on Thursday night last week.

Under the plan, approximately 16.36 billion new shares will be issued, of which 15.7 billion will be Hong Kong-listed H-shares directed to overseas investors. Only 630 million are Shanghai-listed A-shares earmarked for mainland investors. The proposal is pending shareholder and regulatory approvals.

Bank of China  announced plans to sell U$5.8 billion worth of convertible bonds sometime back and we shall see if it needs more cash*.

AND Chinese banks, flush from record profits that were bolstered by a yearlong lending binge, are expected to face a business slowdown as Beijing tries to slow lending to keep the economy from overheating.

Full article from NYT.

Update

Industrial and Commercial Bank of China, the world’s largest bank by market value, and Bank of China, the country’s third largest lender by assets, are reconsidering previously announced plans to sell convertible bonds and new shares in Shanghai and Hong Kong, according to analysts and Chinese media reports. The banks might be under pressure from to sell shares through a rights issue to existing large shareholders and by selling more shares in Hong Kong than in Shanghai, as a means of stabilising the Shanghai market.

Value investing at its best

In GIC, Temasek, Uncategorized on 02/05/2010 at 7:05 am

Buffett has a big stake in Goldman Sachs and the recent problems there had “experts” saying that he must have lost serious money. But no: the fall is gd for him, “Heads he wins, tails he still wins”.

FT reports:

In a surprising turn however, Mr Buffett, also explained that the travails at Goldman had been specific net positive for Berkshire, which bought $5bn of preferred shares paying a 10 per cent coupon at the heart of the credit crisis when Goldman was in need of additional funds.

Despite the roller coaster share price ride, Mr Buffett said that the headline challenges facing Goldman made it less likely that the bank would call its preferred shares. Those earn Berkshire almost $500m a year. If it the shares were called Berkshire would get $5.5bn back, but could only deposit that in low interest accounts earnings less than $20m a year.

“Every day that Goldman does not call our preferred is money in the bank,” Mr Buffett said. “Our preferred is paying $15 per second … so as we sit here… tick tick tick … its $15 in the bank. I don’t want those ticks to go away.”

If only the FTs, scholars and ex-SAF generals were quarter as gd, GIC and Temasek could make better returns, giving government more money to help the needy. They should realise, as FT’s Lex says, Funny how “once in a lifetime” opportunities roll around every few years or so.

SWFs’ big equities bets underperform

In GIC, Investments, Temasek, Uncategorized on 01/05/2010 at 6:16 am

Companies do badly after foreign sovereign wealth funds buy their shares, according to”Sovereign Wealth Fund Investment Patterns and Performance” by Bernardo Bortolotti, Veljko Fotak and William Megginson, reports the FT.

When an SWF invests, the target company’s share price often jumps in the days surrounding the investment, the research found, but over the following year or two, the share price significantly underperforms its peer group.

SWFs usually take significant stakes in companies – the median stake, according to the research, is 8%, the average 14% – and frequently buy the shares directly from the companies rather than on the open market. After two years, the average investment had lagged its peers by 10%.

“They’re giving cash to the companies and taking a large passive stake. All the literature shows this is a bad idea,” said Prof Megginson. The exception that proves the rule is the Norwegian Government Pension Fund, which makes small scale investments in publicly traded shares.

When its results are stripped out of the data, the negative impact of SWF investment looks worse, with an average underperformance of 13.55%.

The findings support the academics’ “Constrained Foreign Investor Hypothesis”, which predicts that foreign investors, particularly SWFs, will find it difficult to hold directors of companies to account because political considerations make them reluctant to antagonise management.

Political concerns may also deter them from selling shares in companies that are not performing according to expectations, removing another possible feedback mechanism that might improve the management of a company.

The underperformance that follows such passive ownership is a problem for other shareholders as well, said MrPeter Butler, chief executive of Governance for Owners.

“It’s the free-rider problem. SWFs are relying on other shareholders [being engaged owners] and holding directors to account. Either they get something for nothing, or nobody does it and the shareholders suffer,” Mr Butler said.

The new research will likely cause some debate, particularly as it flatly contradicts other studies that showed companies benefiting from SWF investment. Nuno Fernandes, professor of finance at IMD and a Lamfalussy research fellow of the European Central Bank, recently published a paper showing SWF investments led to a significant outperformance by the company. Prof Fernandes reported that further research led him to conclude SWFs were actually very good at monitoring companies where they had invested, as well as opening up new markets for the companies and helping them lower the cost of capital.

So Temasek and GIC be warned.

Our SWFs: What our MPs are not asking II

In GIC, Investments, Temasek on 30/04/2010 at 9:52 am

Do they even know that, Norway’s finance ministry will tighten risk controls over the country’s sovereign wealth fund but has rejected calls for an end to active management?

The scope for active management of the NKr2,757bn US$456bn) oil fund will be limited  after criticism of its performance during the financial crisis.

Norway has been reviewing its investment strategy since the fund lost 23 per cent of its value in 2008, doing worse than the decline in the benchmark portfolio against which it is measured. Initial calls for a shift to passive management have become more muted as the fund recovered most of the previous year’s losses in 2009 and outperformed the benchmark by 4.1 percentage points.

However, the report proposed the scope for active management, measured in terms of expected tracking error from the benchmark, should be reduced from its upper limit of 1.5 percentage points to 1 point.

Other proposals included limits to leverage and tighter regulation of risk concentration.

The fund, officially known as the government pension fund, recorded a return on investment of 25.6 per cent in 2009, the best in its 13-year history, on the back of its worst performance the year before.

As the Norway Fund went into the crisis underweiged equities, it used the opportunity to load up on equities last yr.

Our MPs should be asking ministers why S’pore is not following the Norwegians?

Fat chance as they never asked these the questions in this posting.

m/2010/03/15/our-swfs-what-our-mps-are-not-asking/

FYI

In Marchm Carl Heinz Daube, the head of Germany’s formidable debt management agency, travelled to China and Singapore for a meeting with two of the world’s biggest investors – as part of an attempt to tap a new pool of investors, such as sovereign wealth funds – who might be willing to buy German government bonds.

Sumething that the FT said “that would have seemed almost unimaginable – or unnecessary – five years ago.”

China: Command & Control

In China, Economy, Property, Temasek on 23/04/2010 at 5:15 am

As the loan officers for a regional branch of a major Chinese bank were preparing to issue more loans their computer screens froze. It was not a system failure due to Vista problems, rather the bank’s intranet network had been deliberately shut down to stop new loans being made. Full article

The purpose of the above is to illustrate that if the authorities feel the need to control the property market, they can be ruthless.

China must tackle its property bubble for the sake of economic health and social stability, even if the market feels some short-term pain in the process, an official financial newspaper said on Thursday.

Monetary tightening, along with steps to control housing demand and expand supply, are the right policy choices for the government, the China Securities Journal said.

The front-page commentary adds to the impression that officials are determined to make a success of their latest crackdown on property speculation. Previous attempts to cool prices have been tempered by a fear of over-tightening because the property sector is a pillar of the economy. Reuters/ NYT report

So investors in S’pore property counters with big exposures in China, be warned.

https://atans1.wordpress.com/2010/02/03/capland-what-price-the-mega-china-deal/

I’m sure Temasek and its group cos are aware of how brutal the Chinese authorities can be.

https://atans1.wordpress.com/2010/02/08/tlcs-in-china-groupthink-or-mastermind-at-work/

But based on the Merrill Lynch/ BoA fiascos, who knows?


Motivating the elite: learning from N Korea

In Corporate governance, GIC, Temasek on 18/04/2010 at 10:41 am

Maybe MM Lee shld take a lesson from N Korea, even though S’pore is not N Korea    https://atans1.wordpress.com/2010/03/19/our-swfs-staff-shld-be-thankful/

No not execute* the GIC and Temask executives whose judgement lost us billions and made MM look no longer like a sage that he undoubtedly is, but an ordinary mortal that is stupid. He had defended the bank investments saying they were for 30-yrs. Now we know that it might take that long to recoup our principal in UBS; and that Temasek sold out of BoA while a top hedgie was buying.

But he could do something to those who goof up, so that others are more careful of messing-up. Even if those who goofed do not deserve to be punished.

What about caning them? So that the executives in GIC, Temasek , TLCs and GLCs will buck up. My friend heard him say at a lunch some years back of “Lining up some people and giving them six of the best [cane them]”. He was speaking at a lunch in his honour when he last visited KL. My friend was seated beside him, or so my friend claims. But my friend has been known to tell fibs.

If caning sounds outrageous in a civilised place, in the mid-18th century, the British court-martialled and executed an admiral for failing to “do his utmost”. It was meant “to encourage the rest”**. As the admiral executed was the son of an admiral, all naval officers (aristocrats, gentry or upper middle, the lot of them) knew that, if it could happened to a lord and an admiral’s son, it could happen to any of them.

A naval historian wrote that the execution forged “a culture of aggressive determination which set British officers apart from their foreign contemporaries, and which in time gave them a steadily mounting psychological ascendancy”.

For the rest of the 18th century and the whole of the 19th century, Britannia ruled the waves.

BTW the admiral had reason and justice on his side (just like the SWF executives, I’m sure): little gd it did him. And little gd should it do the executives. There are more important things that justice and fair play for individuals when matters of state or profit are concerned.

Hmm, maybe the N Koreans know their British history, better than MM, a Cambridge man.

*They executed the finance chief who messed up a currency reform resulting in protests and a climb-down by a government that is usually brutal towards protestors.

** Another reason was to appease public opinion. People were upset that as a result of his actions (very reasonable), a fortress was lost.

Temask: Profitable holdings require more $

In Banks, China, Temasek on 14/04/2010 at 8:13 am

Err the SDP and its new media allies will spin this as: “Profitable investments — requires more money. Waz happening Temasek?”

As you will be aware Temasek has stakes in two Chinese banks; 4% in Bank of China, and 6% of  China Construction Bank Corporation. These stakes are profitable.

But Temasek would need to invest more if it wants to maintain the size of its stake because they need a lot more capital.

China’s four biggest publicly traded banks (Industrial and Commercial Bank of China, Bank of Communications , Bank of China, China Construction Bank ) could face a combined capital shortfall of at least Rmb480bn (US$70bn) over the next five years, according to the president of Industrial and Commercial Bank of China, reports the FT.

All these banks have announced plans in the past month to raise fresh capital after orders to lend liberally last year. But the total amounts they plan to raise fall far short of the five-year estimate of Yang Kaisheng, ICBC president.

Poor Temasek: nothing satisfies critics gunning for you.

Great excuse for telco to buy bank stake

In China, Investments, Telecoms, Temasek on 10/04/2010 at 5:07 am

Some time back, China Mobile agreed to buy 20%  of Shanghai Pudong Development Bank for 39.8 billion renminbi (US$5.8 billion) to expand its electronic payment business.

The reason for the telco to buy such a big stake in a bank:  China Mobile and Pudong Bank will form a strategic alliance to offer wireless finance services including mobile bank cards and payment services, according to a statement  filed with the HKSx.

Wonder if  the corporate communications departments of TLCs, M1, SingTel and Starhub have filed away this excuse. Their company might need to adapt it if it ever has to buy a stake in a bank in the Temasek stable.

Why?

In late March according to a Reuters report, Bank of China, China’s fourth largest bank, said it was in talks with Temasek, to set up a rural business bank in China. The bank under discussion would have 40-60 branches, President Li Lihui told reporters at a media briefing to discuss Bank of China’s 2009 results

Now wouldn’t such a bank need wireless expertise and don’t StarHub and SingTel love to do dumb things? Fooie fans still don’t know if we will get World Cup coverage.

Temasek: MM Lee being ignored?

In GIC, Temasek on 05/04/2010 at 6:04 am

Bit strange this. Last week, two mining deals involving Temasek were annced*.

Strange because MM Lee said several years back that GIC would not invest in mining entures, because he didn’t understand mining. OK I know he is chairman of GIC but has no post in Temasek but remember Deng Xiao Ping had no official post in the CCP or government when many of the reforms were carried out.

So is Temasek ignoring MM’s sagacity at its, and our peril? Remember a few yrs back, he said SIA shld divest itself of SIA Engr. SIA told the world that SIA Engr and SATS were core to its strategy. Last yr, it divested its stake in SATS via a dividend-in-specie.

Things can go badly wrong, when MM’s sagacity is ignored. Juz like when Temasek divested itself of its BoA stake just as market was turning. Remember MM had defended Temasek’s purchase of Merrill Lynch as one for 30 years. Who was the wiser? MM or the pros at Temasek?

Anyway, don’t the instances where MM is ignored by Temasek and its TLCs show the lie that Dr Chee, his SDP and their local new media and foreign media allies are propogating: that MM is still the puppet master and that the PM and his cabinet his toys.

If Temasek and TLCs don’t listen to him, why shld the cabinet? Why indeed shld anyone?

*

— It will invest US$100 million in Platmin, a South Africa-based platinum miner. This will be in the form of convertible debt in the company. Temasek can convert all the debt into common shares at US$1.215 or about S$1.70 a piece when it matures on December 31 this year. It will then hold less than 20 percent of shares in Platmin.

*

— Temasek will buy about US$490 million ($685 million) of subscription receipts from Inmet Mining.The Toronto-based diversified miner said Temasek’s Ellington Investments unit will buy some 9.2 million subscription receipts, which will each be bought at about C$54 ($75). Proceeds will be held in escrow pending exchange of the receipts for Inmet common shares. The receipts will be exchanged for the 9.2 million shares, representing a 14.16 per cent stake in Inmet on a non-diluted basis. Inmet will use the money from the deal to develop the Cobre Panama copper project and for general corporate purposes.

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