Temasek’s portfolio significantly underperforms regional markets

Fresh from the Oven
04 June 2009

Analysts have estimated that Temasek’s portfolio was up around 13% from the period November 2008 to mid May 2009.

A Straits Times online report quoted the finance research firm Nomura Analysts as saying that Temasek’s portfolio value had bounced back to around $143 billion as of May 15, a gain of approximately 12.5% from a low made last November.

If the research firm is accurate in their estimates, Temasek’s portfolio has significantly underperformed regional equity markets.

Singapore’s Straits Times Index (STI), for example, is up close to 50% in the same period, and Hong Kong’s Hang Seng Index (HSI) is up 45%.

Even the US S&P 500 index, considered a comparative laggard in the recent global rebound in stocks, is up around 25% in the same period. (See charts below.)

Temasek’s underperformance in recent months must have left it much worse off compared to one to two years before, given that during the bear market, its portfolio declined in line with global markets.

The purpose of this note, however, is not to nit-pick on Temasek’s severe underperformance in this 6-month period, as this is not the main concern.

The main concern is that as stewards of the nation’s wealth, Temasek has refused to become more transparent and accountable in the way it invests and manages our national savings.

It has thus far provided wishy-washy and lame excuses for its untimely foray into US financial institutions, and refused to adequately explain the horrendous timing of the sale of its stake in Bank of America, whose shares more than doubled after Temasek sold its stake in the company at its low in March 2009.

Nor has Temasek adequately explained why it invested in the beleaguered Australian childcare firm ABC learning when the company had little comparative advantage in an already saturated market.

Temasek always likes to throw the general cloud that it is investing for the long term, yet its actions are haphazard and erratic, seemingly bearing no relation from one moment to the next.

Given the lack of adequate disclosure, no one is able to tell how much of Temasek’s apparent positive performance since inception is due to good investment decisions made over the years, or merely due to fund inflows from the Government.

But make no mistake about this: Temasek’s reckless investment decisions and its lack of transparency and accountability in the way it manages the nation’s wealth is but the tip of the iceberg: The real ship-sinker is the PAP Government’s refusal to use our accumulated surpluses to provide a comprehensive safety net for the poor, aged and needy, whilst maintaining an undemocratic regime of self-serving paternalism.

4 comments on Temasek’s portfolio significantly underperforms regional markets

  1. Singaporeans should find it strange that a SWF like Temasek is able to lose so much in such a short time. They should question why it has sold off shares at market lows and not hold on longer which they said they could. Without transparency of the actual price & time of sale, these losses can be exaggerated to channel funds out of the SWF. At the ate its bleeding, you don’t need 5 years to undo Singapore.

  2. They do not care for us in providing for a safety net, therefore do not bother looking up to them any longer. Talking about rate of returns and exceptional payment for their high qualification, special skills, scholarship, financial management skills, etc etc….translate to nothing for the people at the ground level. They only take care of themselves well. More good years? Heard that before? For whom? A lot of hot air. Try another way of telling them how we feel. Just do it!

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