Temasek Review - January 30, 2010
Written by Our Correspondent
Dr Tony Tan, the Deputy Chairman of Singapore’s giant sovereign
wealth fund Government of Sinagpore Investment Corporation (GIC)
has reassured Singaporeans that it is in “good shape” following
some concerns and disquiet on the ground over the losses it
incurred in its overseas investments lately.
Speaking to the Straits Times at the World Economic Forum in
Switzerland, Dr Tan said GIC’s move to cut its equity holdings
before the 2008 crash and being buying stocks early last year is
“paying off”.
“We did an assessment in 2007 when markets were
over-exuberant. We de-risked the portfolio, selling part of our
equities. ‘We held it in cash throughout 2008 and in the early part
of 2009, restored our equity values. At the present time,’we are in
good shape and we are fairly liquid,” he said without
elaborating more on it.
A Wall Street Journal article published in September last year
reported that GIC may have suffered a loss around 59
billion Singapore dollars (US$41.6 billion) in the fiscal year
ended March. (read article
here)
A proportion of the losses come from its investments in UBS and
Citigroup, made at the height of the crisis.
Dr Tan said GIC had confidence in the long-term prospects
of the two banks and would continue to hold them.
“We monitor them,” he said, when asked about the huge
losses reported by Citigroup in its latest quarterly statement.
UBS plunged into more trouble with the U.S. government when the
Swiss government backed off an agreement with the United States
that required it to hand over the names of wealthy American clients
of the Swiss bank UBS who were suspected of tax evasion this
Wedesday.
There is a likelihood that UBS will be indicted again by the
U.S. Justice Department if no new agreements are reached.
GIC was also hit by potential losses of more than SGD$1
billion dollars in another failed overseas investment, this time in
an upscale apartment complex in New York – Stuyvesant Town. (read
article
here)
The loss was initially not reported in the mainstream media till
the Temasek Review published an article on it.
Founded in 1981 to manage Singapore’s budget surpluses
accumulated over the years, it has been headed ever since by
Singapore’s strongman Lee Kuan Yew, who is by a lawyer by
training.
His daughter-in-law Ho Ching heads Singapore’s other sovereign
wealth fund Temasek Holdings.
Both funds have come under intense public scrutiny and criticism
in the last two years over their investment losses which amount to
billions of dollars.
Though Singapore is the second richest nation in Asia after
Japan and its sovereign wealth funds can afford to lose billions of
dollars overseas, Singapore citizens enjoy few social welfare
benefits from their government.
There is no opposition in Parliament to check on the
all-powerful ruling party which continues to dominate and control
every aspect of life in Singapore.
Respected international NGO Human Rights Watch described
Singapore as a “textbook example of a politically repressive state”
while U.S.-based Freedom House reported that “Singaporeans are
unable to change their government” under the present electoral
system.
