On Monday SoftBank, the Japanese technology investor, announced that its net asset value had fallen by the equivalent of US$54 billion in value in just three months, or more than 20% .

This led me to revisit a previous article of mine, “Why is Temasek So Massively Over-exposed to Chinese Regulatory and Market Risk?, written in response to Temasek’s announcement in July of a Total Shareholder Return (TSR) of 24.53% for the year ending 31 March 2021. At the time state media and sycophantic (or deliberately interfering in domestic matters with a political end as made illegal under the PAP’s new FICA legislation) foreign media such as Bloomberg and the Financial Times were lavish in their praise, with headlines stating that Temasek had posted its best shareholder returns in 11 years.

However that was largely historic since, by the date of the report, the Hang Seng Technology Index had fallen by 24% since Temasek’s year end and by 43% since its peak. Temasek’s overexposure to China, and to Chinese technology stocks in particular, meant that its 2020 performance was mediocre since in the same year the S&P500 index rose more than twice as far, by nearly 54%. I questioned why 27% of Temasek’s portfolio was in China (and 24% in Singapore where many of its stocks are also heavily exposed to Chinese risk) and only 20% in the whole of the Americas despite the fact that China represented only 5% of global stock market capitalisation while the US represented over 55%.

Temasek’s 2020 report revealed that it lost money at the operating level and that its record profit of $57 billion was wholly due to unrealised gains on its portfolio, Since I wrote the article, the Hang Seng Technology Index has fallen another 6%, taking its total fall since Temasek;s year end to nearly 30%.

Information on the US listed stocks in Temasek’s portfolio can be gleaned from its quarterly 13F filings with the US Securities and Exchange Commission. The last one was submitted on 16 August 2021.

However the total value of the positions disclosed there is only some $46 billion out of a net portfolio value of $381 billion as of 31 March 2021, as it excludes unlisted and non-US listed shares. It may also not be accurate or complete, as the SEC warn in the preamble. Most of the biggest positions are excluded, including of course its SIngapore-listed holdings as well as Chinese stocks listed in HK such as ICBC.

A quick analysis of the bigger positions in Chinese stocks in the portfolio show that many have fallen by 30% or more since the date of the 13F filing which was itself lower than the 31 March year end price. Alibaba stock, in which Temasek held a 1% position, is down by 29% while Tencent (not included in the 13F) has fallen by 24% from its 31 March price. Didi in which Temasek held a US$467 million stake as disclosed in the 13F has fallen 43% from its listing price at which it is also valued in the 13F.

Temasek has also taken huge losses on its ill-judged positions in Chinese education stocks though they are not very significant in relation to the total size of its portfolio. 17 Education and Technology which was valued at US$7.49 at 31 March is worth only US$0.87 now, a drop of 88%. Naidu has fallen by 26%, Kanzhun by a more modest 10% and New Oriental Education by a staggering 86%. Meanwhile the S&P500 index has risen by 16% while the Nasdaq (which is a better proxy for Temasek’s bias towards technology stocks, has risen by 20%.

I reiterate everything I said in my blog. Though it is always possible that Temasek are hiding huge offsetting gains in their unlisted portfolio, their decision to overweight China so much has cost Singaporeans dearly. Apart from anything else it puts the assets which Singaporeans have allowed the Government to accumulate through decades of unnecessary austerity and monopoly pricing hostage to the whims of a potential hostile adversary. Perhaps placing such a large part of our national savings under the control of a government which does not respect private property is meant to smooth the way for potential reunification in a Greater China, after Taiwan has been absorbed?

I have no confidence that Temasek management, most of whom are second rate foreigners who would have difficulty holding down such a highly paid job in their home country, know what they are doing and have real concerns about conflicts of interest and other secret objectives which sway their decision making. It is right to ask why we are paying billions of dollars to Temasek’s senior management and in particular to the PM’s wife whose “retirement “ terms, like her salary, have not and will never be disclosed, if LHL gets his way, when in return we get performance that, at best, lags the general market and, at worst, is a complete can of worms waiting to be dug up by a future government.

Recently Ho Ching’s new vehicle, the Temasek Foundation, announced that it would be giving a free bottle of mouthwash to every citizen. No doubt Singaporeans will be easily swayed by this and other baubles, dangled by Ho Ching and her husband but paid for with their money, and allow their hard-won assets, accumulated over decades of hard work and going without, to be dissipated or disappear mysteriously through the same kind of accounting tricks that the Finance Minister uses in the annual Budget to hide surpluses from Singaporeans. If the free mouthwash sways them to vote for the LHL family dynasty to continue in office in perpetuity, then they will be even less financially astute than the indigenous Americans who sold Manhattan Island to the Dutch for about $24 in beads and trinkets.

Published by kjeyaretnam

I'm a Singaporean economist who became an opposition activist. I blog to provide an alternative to the porkies that the Pinkies tell. It just so happens that my alternative is the truth. That's why I've never been sued in any civil or criminal court no matter how hard hitting my criticism. I'm quoted and interviewed and asked to speak across the world but largely censored in Singapore in an effort to silence my political opinions. The left hate me because they think I split their vote and because I eschew their outmoded economic models. Models that don't work. The Right and the Conservatives hate me because I'm a liberal. I'm not sure what the middle think of me. I don't think there are more than a handful of people in the middle, here in Singapore. I'm a Singaporean born and bred, dual heritage, my parents Singaporean established here before the State of Singapore was created. I'm not Eurasian. I read economics at Cambridge and could be broadly described as from the Keynesian school but I believe in interventions. I was formerly a successful hedge fund manager. After economics and politics my greatest interests are history, film and Makan. I run but I run so I can eat like a Singaporean. View all posts by kjeyaretnam