The portfolio of Singapore sovereign wealth fund Temasek
Holdings, which helped bail out Wall Street icon Merrill Lynch,
fell 31 percent over eight months last year, a minister said
Tuesday, according to local radio.
The report followed Temasek's announcement last Friday that the
wife of Singapore's prime minister will step down after five years
as chief executive of Temasek, one of the world's largest sovereign
wealth funds. Senior Minister of State for Finance Lim Hwee Hua
told parliament that Temasek's portfolio of investments fell to 127
billion dollars (84.7 billion US dollars), 31 percent down from 185
billion dollars, in the eight months to the end of November,
938Live radio reported.
But Lim said the fall in Temasek's portfolio value was less than
declines in two stock indices, including the MSCI Singapore Index,
which she said dropped 44 percent in Singapore dollar terms over
the same period, the report said. A Temasek spokeswoman made no
comment on the reported drop in portfolio value when asked for
reaction by AFP.
The departure of Temasek chief executive Ho Ching, wife of Prime
Minister Lee Hsien Loong, comes amid questions over some of its
investments, most recently the billions pumped into former US
investment bank Merrill Lynch since December 2007.
Merrill Lynch suffered massive losses from high-risk US subprime
mortgage investments, and Bank of America acquired it on January 1
after fears rose over whether the Wall Street firm would
survive.
Last August Temasek announced that in the year to March its
portfolio rose in value to 185 billion dollars, up 13 percent from
the previous year. It also reported a record profit of 18.2 billion
dollars for the year. Lim was responding in parliament to queries
about how the global financial crisis has affected Temasek and the
country's other sovereign wealth fund, the Government of Singapore
Investment Corp (GIC).
In late 2007 and early last year GIC injected billions of
dollars into Swiss bank UBS as well as US banking giant Citigroup,
both of which suffered massive losses from US subprime, or
higher-risk, mortgage investments. Subprime troubles later evolved
into the worldwide financial slowdown. UBS Tuesday posted an annual
loss of 17 billion US dollars, the largest in Swiss corporate
history, and announced 2,000 new job cuts.
Lim said this was not the first time GIC and Temasek have seen
major declines in markets. "In spite of these market gyrations,
including the current downturn, for the 20-year period to late 2008
Temasek had achieved annualised returns of about 13 percent," she
said on 938Live. "GIC, which has a more diversified and
conservative portfolio, has also had creditable returns over the
20-year period."
GIC, one of the world's largest sovereign wealth funds, in
September said its nominal rate of return over the past 20 years
was 7.8 percent in US dollar terms. Sovereign wealth funds are a
form of government-created investment vehicle. Lim said GIC and
Temasek had the resources to weather ups and downs over multiple
economic and market cycles.
Temasek's chairman, S. Dhanabalan, insisted Friday there was no
connection between Ho's departure and the Merrill Lynch stake, or
an earlier controversial venture into Thailand's Shin Corp. He told
reporters to be "a little cautious in coming to a conclusion that
these investments are losses because we have a long-term view of
our investments. And it is too early to say." Temasek has stakes in
well-known regional firms including Singapore Airlines and
Singapore Telecommunications, as well as in global financial
institutions including British-based Standard Chartered bank. GIC's
chairman is Singapore's founding father, Lee Kuan Yew.
