Economics/Business Singapore's Temasek Stumbles Again | Singapore's Temasek Stumbles Again |
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| Written by Our Correspondent | |
| Sunday, 16 November 2008 | |
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Although global markets have stabilized at least temporarily over the last couple of weeks, there is no sign of a letup for Temasek, the Singapore sovereign wealth fund that has already chalked up massive paper losses from its exposure to the world’s ailing banks. Temasek looks likely to have lost its entire S$400m (US$270m) investment in ABC Learning Centres, the recently-collapsed Australian childcare provider, and there are growing concerns that the fund may have to help bail out the Marina Bay Sands casino project in Singapore as owner Las Vegas Sands creaks under a mountain of debt. If last year, when Temasek built multi-billion dollar stakes in the once mighty Merrill Lynch and the UK banks Barclays and Standard Chartered, was a bad time to be putting money into the financial services sector, then now is not exactly the ideal moment to be pushed into a big investment in Singapore’s nascent casino industry. Like other investors enticed by the dramatic gains on offer in a late-stage bull market, Temasek - which is run by Ho Ching, the wife of Prime Minister Lee Hsien Loong - appears to have had the canny knack of buying right at the top of the market and then watching its investments slide in value. Even as the first warning signs of serious problems in the banking sector appeared in the first half of last year, Temasek continued to pump money into the financial services industry, which now accounts for 40 percent of its S$185 billion (US$124 billion) portfolio. This fondness for the financial services sector may stem in part from Temasek management’s closeness to the bulge-bracket investment banks. Despite the humbling of the one-time masters of the universe over the last year, Temasek has continued to recruit senior executives from Wall Street, bringing in Morgan Stanley investment banker Michael Dee in August and Rohit Sipahimalani, another Morgan Stanley banker, last month. But the rapid demise of ABC Learning, which is Australia’s largest childcare provider, shows that Temasek’s poor investment decisions are not limited to the banking sector. Temasek bought into ABC in May last year at a punchy A$7.30 a share and the stock soon headed south as the outlook for the over-hyped operator deteriorated. The shares were suspended at 54 cents each in August but equity investors are likely to lose everything after ABC went into administration because of mounting financial problems. If Temasek were to bail out Marina Bay Sands, it certainly would not be buying at the top of the market. But it would be an investment decision driven less by financial prudence and more by the need for the Singaporean government to ensure that its casino experiment doesn’t fail. Nervous about the Singapore economy’s narrow reliance on shipping and financial services, the socially-conservative government took the controversial step of legalizing casinos in 2005, prompting an unprecedented public debate in the usually acquiescent city state. Having staked its reputation on partnerships with the likes of Las Vegas Sands and Malaysia’s Genting (which won the licenses to operate the two casino resorts), the government is desperate not to let the experiment fail. So Las Vegas Sands’ indication last week that it will not be able to meet the requirements of some of its loans unless it cuts spending will have sent shockwaves running through the corridors of power in Singapore. While Sheldon Adelson, the tycoon behind Las Vegas Sands, has personally confirmed his commitment to completing the Marina Bay Sands resort, analysts now believe it is increasingly likely that the government may have to step in at some stage, probably in the guise of Temasek or one of its linked companies. Adelson’s gaming empire is such bad shape that Sands has had to stop construction in Macau of its huge Cotai Strip development opposite its Venetian complex which is intended to house various 5-star hotels as well as a casino. The Macau government has said -- according to the Financial Times- that it won’t allow any casinos to close and will take them over if necessary. However it seems that commitment does not extend to helping out partly finished projects. “If Las Vegas Sands cannot cough up its share of equity, the Singapore government is likely to step in,” said Donald Chua, an analyst at local stock broking firm CIMB-GK, in a research note. “A viable option would be a 49:51 joint venture between the Government and CapitaLand, with CapitaLand taking a controlling stake.” Singapore-based brokerage UOB Kay Hian added that the syndicate of banks providing the S$5.4bn ($3.6bn) debt facility for the construction of Marina Bay Sands could seek a new investor, hinting that they could turn to 40pc-Temasek-owned CapitaLand, a property group that was involved in unsuccessful bids for both casino licenses. CapitaLand has insisted that it has not held any talks with Las Vegas Sands but, at the same time, it said that it was “strategically watching the situation and studying opportunities related to distressed companies or assets.” And, despite Las Vegas Sands’ assurances, the Singapore Tourist Board stressed this week that it has a number of options should the project fail, including taking possession of the development site. While Temasek or CapitaLand may be able to pick up a stake in the Marina Bay casino on the cheap, gambling is one strategic industry that the government did not want end up owning. The government originally opted for international gaming companies like Las Vegas Sands and Genting because it thought they had the experience and clout to build world-class casino resorts that would attract gamblers from around the globe. While the Marina Bay Sands is unlikely to be re-branded as the Temasek Casino, whatever happens, gaming analysts doubt whether a government-backed resort would have the same draw. With the impact of the financial crisis only just starting to hit the global economy, there are likely to be more disappointments ahead for Temasek in the coming months. But Temasek is not required to disclose regular financial results, as it has been given the status of an exempt private company despite being owned by the Ministry of Finance. So the people of Singapore, whose money Temasek is ultimately controlling, will probably have to wait until summer, when the fund is expected to release its next annual review, to find out exactly how badly it has fared over the past year.
Temasek
also leaped heavily into one of China's highest profile, and perhaps
more vulnerable, property developers, Country Garden. When it went
public in Hong Kong in April 2007, Country Garden was the second
largest IPO in Hong Kong history, with Temasek joining local tycoons
Lee Shau Kee and
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(26)
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written by Leechman , November 25, 2008
http://www.businessspectator.c...enDocument
Votes: +0
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Reply to Mike Lian
written by Leechman , November 25, 2008
The falling of Lehman was clear as sight, as Merrill Lynch sells Bloomberg stake for $US4.5bn, refer to this article (this happened in July this year) which meant that negotiation for buy backs happened ~ 1st quarter this year. So the rich will protect the rich, and all uncles and aunties who bought their bonds had to suffer.
Votes: +2
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Now we know why
written by dragon king , November 21, 2008
All the losses of Temasek can be explained. Ho Ching is not the person who made the great decisions to buy into "useless" companies. It's the great man behind her, the man who has to be agreeable to everything that happens in singapore. All these waste papers can now be laid on his doorstep to show him how stupid he can be. Or maybe he is actually suffering from dementia all these years. What a thought! The whole of Singapore being led by the nose by a demented leader! It looks like Singapore will be the victim of a leader who should have been dumped 20 years ago. I wonder if warnig bells are ringing. So sad. From greatness to the gutter. The lesson the whole of Asia and the world must be: Don't overstay your effectiveness. No wonder no other country has followed Singapore's example of political succession. They all know what is happening and am glad they are not in the same boat.
Votes: +7
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Mike Lian goes crazy.
written by Mike Lian2 , November 21, 2008
Mike Lian
Votes: +0
What are your blah blah about? The article and issues raised here are highlighting the problems of your great system. Instead of dwelling on the past, it seems you have no thought for the losses made and the money spend is of the people, whom are being milked on a daily basis. Why dont you write in at Straits times or your local media, Am sure they would love your article and as they have run out of writing any more world class articles. report abuse
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SINGAPOREANS AREN'T SILLY PEOPLE, Lowly rated comment [Show]
Lack of Accountability
written by Dynas Tee , November 21, 2008
Tumasek seems to be deploying the funds of the people of Singapore without much accountability. Much like Wall street bankers, the foreign talents are richly rewarded for bringing in new deals for the Sovereign Wealth Fund.
Votes: +7
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written by YC , November 20, 2008
Having studied the culture and mind set of corporate Singapore for many years
Votes: +3
No sub ordinate in their right mind, no matter what their conviction is will ever question the decision of the big boss. In this case Temasik, runs by Madam Ho, the wife of the PM, it will take a very brave person to advise the Madam against it. Am I surprise, definitely not, The question how many more lemons are there in Temasik stable that has rotten away but the smell vapourised by scented oil. report abuse
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Re: Mike Lian
written by Voter , November 20, 2008
Exactly! Got a problem? Work towards solving it! Give constructive feedback and more importantly, take action.
Votes: -1
The decision to give the ruling party power is said and done. So it's time to work with what you've got instead of whining and doing nothing about it. Want to correct this perceived problem raised by a lack of political dissonant voices? Then look at it during the next election. Posturing now is just plain silly and does nothing to move things forward. report abuse
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Making Hay NOT Hayfever, Lowly rated comment [Show]
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written by Concerned , November 20, 2008
I would like to direct my reply to 'Voter'.
Votes: +4
1st and foremost... most Singaporeans were not given the opportunity to vote. The incumbents through their tried and tested methods of libel suits have bankrupted/convicted most of the opposition politicians resulting in many 'walkovers' during the elections. Even during elections, through the abuse of police powers and press regulation, the incumbents limit the amount publicity that the opposition parties receive. I hope that clarifies the situation that Singaporeans are facing. It's really an extremely restrictive society here... where the elite few regulates everything. report abuse
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Vote the party into power and you get what you wish for
written by Voter , November 19, 2008
What's the use of so much talk here? Singaporeans continue to vote the incumbents into power time and time again.
Votes: +5
What's all this blabbering for? The netizens clamour for change but yet change is something they do not like to stomach when election time comes. Singaporean's deserve their government! They were given a choice and they supported their government. To disown them now is just spineless. Stick by your guns! You voted! You chose! So grow a spine and take responsibility for your choices! report abuse
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EARTHquake
written by Murugiah , November 19, 2008
As usual, the dissidents are always riding on the back on hindsight.
Votes: +1
Maybe these smart Alecs knew when Lehman was going to collapse? Cleverer than the Japs, Hongkees or Koreans I guess? Ever ready to curse, condemn but where are the solutions (not regurgitated, please) ? So . . how do we or the world ride over the worldwide tsunami? or it is another of the empty vessels making the most noise? report abuse
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Con-sultans
written by Dynas Tee , November 19, 2008
Con-sultans tend to be flippant when investing other people's money. Ask any investor in the Lehman's minibond and Morgan Stanley's Pinaclenotes which were actively promoted by the Con-sultans. Similarly, not much should be expected of the Foreign Talent Consultans who are in charge of investing your country wealth.
Votes: +8
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written by WingWang , November 18, 2008
The people at the top think they are clever and invincible. But they are actually not that great. Now they discover they are leelek ( ask your tamil friends the meaning of leelek)
Votes: +3
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The real spelling
written by marsupial judge , November 18, 2008
Want to learn to spell?
Votes: +3
Temasek Themasik Themansik The Man Is Sick. That's the dete-story-rioration of Singapore. Everyone at the top is over the hill. report abuse
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written by WingWang , November 18, 2008
Temasek is typical of a govt linked company in authoritarian countries, which include Singapore, Malaysia, Myanmar, etc. They do well in their own protected market where the government can bully other companies. But once they compete internationally, they cannot compete because they are not run by the best people, but by the politically connected cronies. I am sure this is not the first time Temasek lost their pants. They find it harder to cover up this time because of the magnitude of the losses. Also the cyber news and blogs make it harder for governments to cover up, as the Malaysian government has already discovered. The government can muzzle printed press and the TV stations, and the police can beat demonstrators to a pulp, but they cannot muzzle the cyber news network and the blog. And they cannot stop videos being aired on Youtube. One up for the people!
Votes: +15
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ABC Learning
written by Dynasty , November 18, 2008
Singapore is short of all sort of resources. If Tumasek do some strategic investments in Ozzie, it should have invested in resource companies like BHP, Rio Tinto etc. I do not see anything strategic in investing in ABC Learning except to tap more foreign talents into Singapore. Another few hundred million quids down the drain for the learning experience for the Tumasek foreign talent team.
Votes: +8
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Singapore's Lack of Local Brain
written by dbrutal , November 18, 2008
Seems like Singapore is lacking in its local brains to manage the funds. Maybe PAP should hire economist from Myanmar to head Tumasek
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written by Zouknotforme , November 18, 2008
Temasek 20 years ago never lost such big sums of money, at least we never hear of it. The problem is not whether the CPU is 8 bit or 64 bit dual core, the problem is the whole thing is not run transparently with a clear mandate of what to achieve and for which shareholder. temasek considers the MoF its shareholder, not the citizens. Same with GIC and other stat boards. Its like a notebook sealed, you don't know what is inside, except from time to time, it displays some ultra-statistic about how fast it is running.
Votes: +4
Second point: there is really no knowing how the bankers from Wall Street hired by Temasek are doing in terms of bringing back returns, as long as Temasek is not transparently run. MoF covers for Temasek's losses, Temasek's top brass covers for the bankers hired by its board, and the bankers protect their cronies. Sounds like Indonesia's government under Suharto. report abuse
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na
written by Confusius , November 17, 2008
I still can't get the spelling right?
Votes: -1
Temasek Tumasik Temasik TombMaSick  report abuse
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Complacence
written by Joey , November 17, 2008
Temasek is like a domesticated pet going out into the wild. Overconfidence in one's abilities and not taking heed of the danger signs spells trouble. When times are good, everyone makes money; it's a question of more or less. On the brink of an economic downturn, worldly wisdom is vital for survival. It applies to individual and corporate investors. Ultimately, there is a lack of accountability for failures. It's often the few savvy China uncle or Indian bai businessmen would survival the roller coaster bumps of business better.
Votes: +3
On the surface, ABC and the likes of Merill Lynch look like bargains. They are icons in their fields and certainly respectable businesses. However, it is crucial to consult local professionals - lawyers and chartered accountants, as well as international experts, do extensive research, before sinking in sovereign funds. And looking ahead - what is good yesterday may not be profitable tomorrow. Everyone is equally saddened, and some angered, by the unfortunate fate of Temasek investments. report abuse
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And do the tax payers have any say on how their money is invested or spent?
written by Ree , November 17, 2008
And Temasik is investing singapore tax payers money eh?? How nice it would have been if that money was spent in singapore for development of singapore..It is now in the pockets in US consumers and will never be recovered
Votes: +3
When will Asian government spend their tax payers money on their own tax payers? These authoritarian paternalistic regimes will no doubt bankrupt hardearned money or citizens report abuse
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Sycophants ride again
written by hop hop , November 17, 2008
There appears this sycophant called hip hop from the PAP who is doing nothing to help his cause. Singapore is not doing badly because it's people don't sit on their backsides waiting for the government's handouts. It is the government that is doing badly. In USA, China, Japan, Korea, change starts from the top. In Singapore it is the foot soldier that is changed. The brain is still working on INTEL 8008. This brain is getting advice from another just as old INTEL 8800. Now you know why Temasek is in such hot soup. In any other organisation, the CEO would have been sacked, as has happened. But of course she cannot be sacked. That would be unthinkable - she is so talented! Whether Singapore needs one or more political parties is not for the PAP to decide. It's the people who decides.
Votes: +11
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Seeing is Believing
written by Hiphip , November 17, 2008
Don't bulls**t lah. Who isn't spared today? WHO???
Votes: +0
Reply to Dynasty Bullxxxx - Relative to many others Singapore's still good, as expected. Fortunately, people are not blind like you. Singapore's no-nonsense governance has indeed stood the test of time. Check out how the financial tsunami has impacted adversely bigger and resource rich economies like the US, European countries, Australia, etc. You think people are stupid and can't judge for themselves. Don't underestimate the intelligence of the average Singaporean and the world at large. Ha! Ha! Ha! You must be very disappointed that Singapore didn't collapse like many others when the financial tsunami appeared? report abuse
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Too long at the top
written by tieu mia seng , November 17, 2008
Temasek's problems like the PAP's problems stem from being too long at the top with no tolerance of feedback. Countries like China, Taiwan, Japan, Korea undergo regular renewal at the top. Old CPU's must give way to more powerful ones. In Singapore, renewal is for the foot soldiers. Hence you get a lot stirrings inside the small box but the CPU is still the same old 8800. Others are already in Quad core with Centrino. Hence there will be no improvement in Singapore unless and until the people at the top get out. PM Lee mentions leadership in the USA, China etc. but is unable to fathom the importance of change at the top. For now we will still get a lot of stirrings with the feet, with all the mud and s**t, while the old CPU thinks it has everything in control. Worse still, there is an original Apple CPU from the 70's advising the current IBM 8800. What a mess!
Votes: +5
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Foreign Talents
written by Dynasty , November 17, 2008
The reason why Tumasek loses its pants again is its implicit trust on anything foreign especially foreign talents. If like other investors without a deep pocket and access to cheap funds, it would be a bankrupt institution by now.
Votes: +5
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The
island republic's premier sovereign wealth fund takes another
massive writeoff 
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