Leong Sze Hian / Columnist

In the annals of investment history, perhaps never has so much been lost in so short a time!

Will Singaporeans ever forget when they woke up on May 16 to discover that – “Temasek sells BoA stake: Move in line with fund’s new strategy, but it may have lost at least US$2.b” (Straits Times, May 16)?

It states that:

“Singapore’s state-owned investment vehicle Temasek Holdings sold all its Bank of America (BoA) shares in the first three months of this year, resulting in estimated losses of between US$2.3 billion (S$3.4 billion) and US$4.6 billion”.

In the annals of media history, perhaps never has so little been said in so many words, as in Temasek’s letter to all the newspapers, clarifying its BoA loss!

From the ST letter:

“I refer to recent reports and commentaries on Temasek’s divestment of its Bank of America (BoA) stake. We would like to clarify some of the points raised.

Temasek invests with the objective of delivering sustainable returns over the long term. This means our investment strategy is not aimed at delivering target returns on a year-by-year basis. This is why we report our portfolio returns not just for a single year, but for various time horizons in our annual Temasek Review.”

Everybody (without exception) reports portfolio returns for various time periods. So, to give the reason that different period returns are reported because Temasek seeks long term sustainable returns instead of on a year-to-year basis is really “nonsense”. I’m sorry I can’t find any other suitable word to describe this. It does not answer any questions about the BoA loss.

By the way, why is it that Temasek and Parliament keep reporting its performance over different selective time horizons? Its reporting should be consistent every year – 1, 3, 5, 10, 20, 30 years, and from inception.  


“Our investment in Merrill Lynch was made in December 2007. This was exchanged into BoA shares in January this year following BoA’s completion of its September 2008 offer to buy Merrill. Our investment thesis had changed from Merrill’s specific businesses to the more diversified BoA linkage to the broader US economy. The risk-return environment had also changed substantially. We decided to divest our BoA stake after considering all relevant factors.”

What exactly were the relevant factors considered? These are not elaborated on at all. What is clear to the public is that Temasek bought BoA at almost the worst time, sold them at the worst time – this may go down in history as the all-time classic example of buy high, sell low!

For a loss of such a magnitude, who were the people who approved, gave consent and knew about the sale?

Further in the letter:

“This move to balance risks against opportunities is part and parcel of our discipline of investing and divesting to deliver sustainable long-term returns on our entire portfolio.”

Aside from the BoA’s loss, Temasek’s last reported disclosure that its net portfolio value dropped in value from $185 billion to $127 billion from March 31 to November 30 last year, a fall of 31 per cent. The public needs to ask: what is the value now after adjusting for any injections from the Government and the valuation (pre and post transfer) of state assets transferred to Temasek?


“We are mindful of the risks we face as we invest. We reinforce this risk-return balance through a compensation framework which puts the institution above the individual, emphasises long term over short term, and aligns employee and shareholder interests for both the upside and downside, over the medium and long term.”

It is bad enough to lose so much of Singaporeans’ money in such a short time, but I think it may be akin to “rubbing salt into the wound” when Temasek declines to reveal the actual amount lost.

Can any government in the world that loses a few billion dollars be able to escape accountability and transparency as to how much was lost?

This is not the first time that Temasek has lost so much money.

Isn’t it about time that an accounting of all its losses be disclosed to Singaporeans?

How can Temasek say that employee and shareholder (Singaporeans) interests be aligned, when Singaporeans are still being kept in the dark when even our Finance Minister said in response to the BoA loss, that they do not question the day-to-day investments of Temasek?

As I said in my interview with Reuters (Singapore’s Temasek defends costly Bank of America exit, May 24), “The letter doesn’t give the answer that everybody is asking: How much did they lose?”

Strange definition of long term view

Singaporeans were told recently, and repeatedly, in the first few months of this year that investments in U.S. Banks were long term and would recover.

Since Temasek sold all its BoA shares in the first three months of this year, were not the “investing for the long term” statements, somewhat irresponsible?

As to “outgoing CEO Ho Ching reiterated this week that the investment fund takes a long-term view, at least 10 years and up to 50 years”, this must arguably be the understatement of the century!

Such remarks beg the question as to the competence of its outgoing CEO.

Does or does she not know what’s going on?

To put the amount of US$2.3 billion (S$3.4 billion) to US$4.6 billion (S$6.8 billion) in perspective, it is about two to four times the last two per cent GST increase to help the poor!


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