Eric: Temasick, Stop Hiding Behind Ur Running Dog!

[makapaaa]

<TABLE border=0 cellSpacing=0 cellPadding=0 width="100%"><TBODY><TR>June 5, 2009
ASSESSING TEMASEK'S PERFORMANCE
</TR><!-- headline one : start --><TR>Split portfolio in two
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<!-- START OF : div id="storytext"--><!-- more than 4 paragraphs -->I REFER to the report on the Finance Minister's response in Parliament on Temasek Holdings' performance ('Temasek beats returns of many funds', last Friday). In explaining Temasek's loss in the sale of its stake in Bank of America, Mr Tharman Shanmugaratnam mentioned that a large part of the $58 billion portfolio decline was due to the slump in market value of the 10 largest listed Temasek-linked companies in Singapore.
I understand that most of its investments in Singapore - such as in Singapore Airlines, DBS Bank, ST Engineering and SingTel - are for strategic purposes and cannot be traded to maximise returns.
We should review Temasek's performance on a portfolio basis over a period of time rather than each individual investment decision. The problem with assessing Temasek's performance is that its trading investments and national strategic investments are mingled together to form one portfolio.
I propose that the current portfolio be split in two, with one for national strategic purposes and another for trading purposes. Temasek can provide separate performance statements in its annual report for the respective funds.
The strategic portfolio would probably be static and passively managed as investments are not held for profit maximisation but for national security reasons. Ministries can decide on the need for Temasek to retain the stake in these companies.
For example, the Ministry of Defence can decide if there is a need to retain a controlling interest in ST Engineering; likewise, the Ministry of Trade and Industry can decide on the size of Temasek's stake in SIA. In this way, Temasek fund managers will not be penalised if these shares go down.
The investment portfolio would comprise all investment assets which are managed actively like a private equity fund or a mutual fund. Fund managers can actively manage this portfolio and be assessed on their performance within an investment cycle to be decided by the Ministry of Finance. They can be judged on their investment decisions in Shin Corp, Bank of China, Merrill Lynch, ABC Learning and others. We can also formally benchmark them against other similar best-in-class global funds.
In this way, we can judge Temasek's performance as an active fund manager.
Eric Tan Heng Chong <!-- end of for each --><!-- Current Ratings : start --><!-- Current Ratings : end --><!-- vbbintegration : start -->

 

[VeryWise]

Agreed totally. It will be interesting to know the exact portfolio of Temasek. This will give us a very clear idea how it has performed for the past years and in future. Separating GLCs from the "high profile" investments it had made will provide a transparent view of the capabilities of the fund managers in the organisation cos the investments in GLCs, like Singtel, Keppel, etc are generally static and long-term (also, those GLCs probably have stable growth since many are monopolies). It's the investments into Barclays, AIG, etc that we should judge if they had indeed been very bad in their acumens. A few billions in so many mis-investments aren't just a honest mistake. If it is, it will be too much a honest mistake. The citizens should have a good reason to want to correct this "honesty" cos it is losing us too much money which I think can be put to better use.