Temasek Losing Its Touch?

Today marks the 20th anniversary of the Tianamen massacre. Today also brought a news update of yet another massacre; a financial massacre.

It was announced that Temasek Holdings sold its stake in British banking giant Barclays in December and January, at an estimated loss of between 500 million pounds (S$1.2 billion) and 600 million pounds.

Guess we can’t be too shocked by this news as the MSM was preparing us for it by softening the sentiment with ‘good’ news the day before:

• Temasek recoups half of losses in S'pore portfolio
• Temasek portfolio up 13%

Once again thanks to ‘astute’ investment timing, Temasek chose to offload its stake just as the stock hit its lowest levels since 1985. It is rumoured that this round of panic selling was over fears that Barclays could be nationalised. That didn’t happen in the end but they would argue that at that time, it was a very real threat. With that said, shouldn’t then GIC be worried about its investment in CitiGroup? Or will the excuse be that the investment thesis changed as it did for its investment in Merril?

There are ways to divest can still make a profit. Just look at the Abu Dhabi government which unlike Temasek, made a killing in its Barclays investment. It invested into Barclays last October sold out for a US$2.5 billion profit only last month.

Jeremy Warner of The Independent questions if Temasek is losing its touch. He adds “Temasek's loss on a similar investment in Bank of America was an even more jaw-dropping $3bn. If they haven't been already, someone, somewhere, is going to get fired.”

If there were a silver lining to be found, perhaps the decision makers at Temasek would be more cautious before they run head in and dump millions into another company laden with financial woes and uncertainty. Ooopss ... spoke too soon. Now they are looking at AIG.