Reserves – more or less?

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Leong Sze Hian

Why can’t GIC’s losses be revealed like Temasek’s?

I refer to the editorial, “President's account of reserves use welcome” (ST, Feb 20).

It states that “Economic conditions all over are so bad. People will relate drawdowns to the humongous paper loss Temasek Holdings and the Government of Singapore Investment Corporation are staring at in their investments.”

I also refer to the article, "Temasek portfolio down 31%" (ST, Feb 11).

If the three power companies were not sold by Temasek to foreign companies, would the loss have been higher?

In the previous year (2007), an injection of $10 billion was made into Temasek. Were any injections made between March and November last year?

Since the loss of Temasek can be disclosed, what was the amount lost by the Government Investment Corporation (GIC) for the same eight month period?

According to the article, “Temasek takes severe hit” (The Nation newspaper, Thailand, Feb 9), “GIC started the crisis with roughly S$550 billion in reserves …. estimate is that it has lost about S$190 to S$200 billion …. These are all worst-case estimates.”

As to the statement, “GIC’s 20-year average return was 5.8 per cent as at March last year. While, this figure will fall for March this year, it will not be sharply down”, since it is now only February 10, how could anyone foretell the future and know that it ‘will not be sharply down’ by the end of next month?

With regards to the remarks that “Temasek’s 31 per cent drop in portfolio value was less than the 44 per cent plunge in the MSCI Singapore Index and the 45 per cent delcine in the MSCI Asia ex-Japan index in the same period”, it may not be very appropriate to benchmark a globally diversified sovereign wealth fund portfolio against a 100 per cent equities portfolio in just a single country or region.

According to a Wall Street Journal article, sources had leaked that GIC lost $50 billion. I do hope that this estimate is more accurate. If indeed this is true, I see no reason why GIC's losses cannot be disclosed, as it may indicate that the loss was only about less than 10 per cent, which is a very credible performance in this financial crisis.

Perhaps the last thing we may need in a recession is more uncertainty and anxiety about how much we have lost, and how much we have left.

The article, “Economic focus: Full disclosure – The case for transparency in financial markets is not clear-cut” (The Economist, Feb 21)  is enlightening. It says that, “Its promises are alluring, yet elusive; everyone, from politician to pundit, calls for more. In its recent report on financial reform, the Group of Thirty, a body of financial experts, mentioned it more than 30 times. Transparency is in vogue.”

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