The New York Times
Temasek Holdings, the Singapore government’s sovereign wealth fund, said Tuesday the value of its investment portfolio fell by 31 percent of its total, or about $39 billion, between March and November last year, a reflection of the stock market rout set off by the turmoil surrounding U.S. subprime mortgages.
Temasek’s portfolio was worth 127 billion Singapore dollars, or $85 billion, at the end of November, down 31 percent from the end of March. Lim Hwee Hua, senior minister of state with the Finance Ministry, confirmed the figures to Parliament on Tuesday, news agencies reported.
The decline was broadly in line with the performance of the world’s stock markets last year — the MSCI World Index fell 38 percent over the same period in U.S. dollar terms, Bloomberg News said.
Temasek, which has a wide-ranging portfolio spanning financial services, telecoms, media, infrastructure and other sectors, is nursing losses from high-profile investments that it made in Merrill Lynch and Barclays as it aggressively expanded outside its core Asian market.
Its $5.9 billion investment in Merrill Lynch alone resulted in a loss of more than $2 billion, as the shares plunged before the stock was delisted following the Bank of America purchase.
Temasek controls some of Singapore’s high-profile companies, including Singapore Airlines and Singapore Telecommunications, and has stakes in global companies like Standard Chartered.
Last week, Temasek announced that its chief executive, Ho Ching, would step down and would be replaced by Charles Goodyear, the former chief executive of BHP Billiton, on Oct. 1.
S. Dhanabalan, Temasek’s chairman, said that the decision by Ms. Ho, who drove the state fund’s expansion outside Singapore with acquisitions in China, Europe and the United States, to step down was not linked to performance and that it was too early to determine whether investments made in the last two years will lose out in the long term.
Ms. Ho is married to Prime Minister Lee Hsien Loong.
Singapore wealth fund loses steam
The value of Singaporean sovereign wealth fund Temasek Holdings contracted last year as the economic downturn dented the value of its investments.
Temasek said its portfolio had shrunk 31% to 127 billion Singapore dollars (£57.2bn; $84.7bn) in November 2008, down from S$185bn at the end of March.
The value of Temasek’s investments in banks such as Merrill Lynch has declined due to the credit crunch.
Temasek bought 9% of Merrill Lynch in 2007 before its shares were delisted.
The country’s other sovereign wealth fund, Government of Singapore Investment Corporation (GIC), has also seen the value of its stakes in banking concerns reduced.
“It’s easy to say the acquisitions were done at the wrong price, but I believe Temasek and GIC took the risks based on their due diligence,” said Amanah Asset Management chief executive, Scott Lim.
“The depth of the crisis is something we couldn’t have anticipated.”
Temasek had ploughed some US$5.9bn into Merrill Lynch and owned about 9% of the US company.
Merrill Lynch’s shares plummeted 78% in value before it was eventually delisted and bought by Bank of America.
Temasek converted its Merrill stock and so now holds 189 million shares in Bank of America.
Despite the losses in foreign holdings, the government said it would not automatically increase investment in local firms, but would instead consider whether to establish another fund to prop up local companies.
The government also highlighted it had been quick to reduce its equity shares shortly after the credit crisis took hold, thereby limiting losses.
What strategy Temasek adopts in the future remains to be seen as chief executive Ho Ching – who is married to Singapore Prime Minister Lee Hsien Loong – last week announced she would step down after seven years with the fund.
In October she will be replaced by 51-year-old Chip Goodyear, a former BHP Billiton chief executive.