Simple logical explanation, if you think that Temasick
(Singapore Government) did factor in the depreciation of the US
Dollar in Dec 2007.
Would it be cheaper to pay approximately SG$6.248 billions (US$1
= SG$1.42) for Merrill Lynch in Dec 2007, or
pay SG$6.072 billions (US$1 = SG$1.38)
for it now? At the end of the year, if the US Dollar falls to
US$1 = SG$1.30, would it be cheaper to pay for it using SG$5.72
billions?
You are ONLY factoring in the depreciation of the US
Dollar, you haven't even factor in the likely losses from the sub
prime debacle.
With the wide exposure of Merrill Lynch to sub prime
mortgages.
Do you think that it was a worthwhile investment if Merrill
Lynch gave you an approximately US$5 discount from it's share
price from it's
share price of around US$53 in Dec 2007.
Did they even factor in the imminent recession facing USA in
2008?
Then again, Temasick is not directly using CPF funds,
so directly it's not the money of Singaporeans.
BUT indirectly, MAS makes a loan of close to $100 billions to
Temasick, CPF makes a loan of $100 billons to MAS.
CPF $100 billions ==> MAS $100 billions ==> Temasick.$100
billions
maurizio, buying a huge equity stake in a bluechip
company such as ML is not like trading shares in the
stock market, where you can enter and exit anytime you like.
When you talk about forex loses, are you aware that,
1) Most of Singapore reserves are still in US$
denomination,, hence it will not make a difference if they buy
ML at 1.38 or 1.45
2) In 2007, analyst at DBS; which is a GLC, has
already forecasted that US$ will hit as low as 1.38 in
2008, way before Temasek acquire ML. You mean those guys at Temasek
and GIC dont read newspaper?
3) Suppose if Temasek and GIC are so concern
about FOREX loses, I am sure it will not be difficult for
them to get MAS to devalue the S$ just to make their
investment look pretty isnt it?
What seperate a good investor from an average one is
his/her ability to identify opportunities when everyone else are
running for cover.
