Ho Ching has stepped down as CEO of Temasek Holdings. For over 6 years, the Prime Minister’s wife held one of Singapore’s most powerful positions.
During her reign, some losses at Temasek included:
– SGD 400 million- ABC Learning Centre, Australia
– SGD 1.4 BILLION – sale of Merril Lynch (according to Reuters). Figures from Mutual Fund facts report that Temasek paid USD48 per share and at time of sale, sold their shares at USD29. Temasek denies this.
– SGD 2 BILLION loss – Shin Corp fiasco
– Further SGD 2.4 BILLION – Shin Corp fines
Under her, Temasek’s investments in UBS (Switzerland), Citigroup, Barclays and Merrill Lynch – at an original cost of US$21.88b – have declined on by some 47 percent in value.
Paper loss of US$10.28b. Paper Loss defined: an unrealized loss on an investment calculated by subtracting the current market price from the investor’s cost.
Contrary to some Singaporeans, I understand that Singapore’s position in the global community makes our markets heavily dependent on international trade. A small home market also weakens the government’s ability to pump prime the national economy by providing cash incentives and rebates to boost consumer spending.
If I recall correctly, local consumer spending only contributes 40% to Singapore’s economy (the average worldwide is around 50-55%).
What this means is that our economy depends on how well our friends do internationally. Many have bayed for blood at the losses incurred buying into banks like Citigroup but if you think about credit markets and cash flow- banks like UBS, Merrill Lynch and Citigroup provide credit to businesses and corporations across the continental United States.
Despite our size, we’re the 15th biggest trading partner to the US ergo. If Temasek didn’t act to purchase faltering US banks, stalled credit flow for US businesses might have dealt a deadly blow to Singapore’s economy.
Whether Ho Ching was looking hungrily at simply buying US bank shares for profit or out of an understanding of the need for US businesses to remain liquid in order to continue trade with Singaporean companies- we really won’t know.
I do know this- in a stroke of good fortune, our toxic Merrill Lynch shares converted to Bank of America stocks after BoA’s buyout of Merrill. And quite frankly, I’m taking it as a sign of a Higher Power (God, not LKY) simply looking out for lesser mortals in Singapore.
I look forward to the investment savvy of Temasek’s incoming CEO Charles Goodyear. Under the American’s care, BHP’s stock rose almost fourfold, outpacing the MSCI Materials Index’s 83 percent advance. Between 2003 and 2007, revenue went from $15.6 billion to $47.5 billion amid record gains in commodity prices.
Truth be told, I don’t understand how an Electrical Engineering graduate from Stanford (i don’t care how good the university is) implies financial intelligence that led Ho Ching to her meteoric rise as the head of Temasek (form your own opinions). For now, I believe we can all rest a bit easier now that someone with Mr. Goodyear’s impeccable credentials and investment wisdom is at the helm.
Madam Ho Ching, I bid you good luck and I hope for our sakes, you enjoy your retirement.