Sunday, June 21, 2009

Losing touch and sense of proportion

While Temasek is losing its investment touch, Alvin Foo of the ST is losing his sense of proportion and reality (as you will see from his article attached below). With great conviction it is declared that Temasek out performed nearly very index and person worth noting (Buffet no less), but it comes with a caveat: "assuming the value of its portfolio remained unchanged since November last year".

What value is there in making a comparison for a 10 yr period that ends in March 2009 when the data is only updated to November 2008??

It is also quite convenient that the period of comparison ended at march 2009; a period that many analysts consider to be the bottom of this economic downcycle. Temasek's recent investment disasters were offload either prior to or during this period. This meant that they did not benefit from the vicious rebound since the march lows to date. Would Temasek still beat the street if the months of april to june were included? It probably would if you continue to only consider their holdings as of Nov 2008.

The first 3 months of 2009 were torrid times for ALL investors, including Buffet that earnestly came out and declared he had make big investment mistakes in late 2008 and apologised to his sharehlders.Did Mdm Ho make such public apologies for her countless blunders? No. She had no regrets and picked up an award for it.

We must also understand that Buffet's Berkshire Hathaway is unlike Temsasek which has constant captial injection (tax payers money). This naturally puts Temasek at an advantage as we all know the market moving power of big money. And without fear of losing this captial injection, Temasek can basically throw caution to the wind and place their bets at the roulette table knowing full well that their chips will be replenished every month at a rate of 33% of gross salary.
SINGAPORE investment agency Temasek Holdings may have taken a hit recently on some of its high-profile banking investments, but over the longer term it has outperformed key global benchmarks.

Figures obtained by The Straits Times show that over a 10-year period to March this year, Temasek outgunned several closely-watched equity indexes.

It also beat other notable long-term investors such as Berkshire Hathaway, a top US investment company headed by billionaire Warren Buffett.

Temasek's performance has come under scrutiny in recent months after it suffered significant losses earlier this year on investments in Western banks Barclays and Bank of America (BoA).
The state investment house delivered an annualised total shareholder return by market value of 5.4 per cent from March 1999 to March this year, assuming the value of its portfolio remained unchanged since November last year. That is the date of the last available update of the value of its investments.

This compares with a return of 4.5 per cent in the same period for the MSCI Asia Pacific excluding Japan index, 3.1 per cent for the MSCI Singapore index, and -3 per cent for the MSCI World index, according to figures obtained by The Straits Times.

MSCI indexes are key indicators commonly used by institutional investors to see how well they are doing relative to the market.

Temasek's main investments are in stocks, with the bulk of its assets in Singapore and Asia, so these indexes are regarded as a useful gauge of its performance.
Temasek's returns were also better than that of long-term investors like Swedish investment firm Investor AB, which delivered 3.7 per cent, and Berkshire Hathaway, which yielded 0.7 per cent.

Last month, Finance Minister Tharman Shanmugaratnam told Parliament that Temasek has performed 'respectably' compared to relevant market indexes and reputable institutional investors.

1 comment:

Seelan Palay said...

Thank you for the insightful blogpost. The Singapore Democrats have featured your post in our blogs of the week section –

More about our “Blogs of the week” section –