Friday, July 9, 2010


I heard this joke ... likely it carries some truth in it, that any company stock Temasek buys into, we better do the reverse and sell it off, if we have it.

Looks like Temasek disastrous investment losses in recent years have left its mark on ordinary citizens.

It is reported in the papers that Temasek net profit fell 26%, while its portfolio value hit 186 million. It is currently aggressively investing in high risk areas, such as mining business. Looks like it has not learn its lesson inspite of the massive losses.

In the same article, its executive director claims that Temasek is a long term investor and does not enter and exit markets the way a fund does. Long term investor and not a fund? Is not Temasek together with GIC is S'pore's sovereign wealth fund (SWF)? Temasek actions do not support its claims. It has invested in trouble financial institutions giving the reason that it is looking at long term future of those companies. However, within a short period of time, Temasek let go of them like hot potatoes just when valuation was picking up. Temasek has been widely criticised for its poor investment strategy and timing. Besides, there has been no accountability over the whole incident from its CEO, Ho Chin.

As Temasek is one of the investment arms of the country's public fund, should not it be more cautious, especially after the painful losses ? The public is looking for consistent and sustainable returns on public money used in investment. Not excessive risk taking for sky rocket profit and the next moment chalking up billions in losses which wipe out previous years gains.

It is also reported that Temasek is not actively searching for a new CEO to replace Ho Chin. Why ?

In fact the mystery as to the real reason behind the sudden departure of the previous CEO Mr Charles Goodyear has never been resolved. Likely it wishes to avoid another similar situation. You can get away once from explaining the exit of a high profile CEO, but not twice.

After all Temasek's company investment policies and operation are not that transparent. It would unlikely welcome in depth queries in their 'history' and would prefer any new comer to accept things just as they are.

Look at the fate of Chartered Semiconductor which is under Temasek Holding. It used to be a blue chip company listed. Once upon a time it was one of the hot favourite shares being traded. After all most folks think nothing serious could happen to a blue chip share which had large capitalisation. The common perception is : Temasek = government = trust. Well, blind trust could be dangerous as Chartered Semiconductor has been delisted and no longer in existence.

Temasek action speaks for itself.

No comments: