Prime Minister Lee Hsien Loong on Friday defended the performance of state-owned investment companies after a plunge in the value of their stakes in Citigroup, Merrill Lynch & Co and other global banks.
What else can he say? As if he will criticise his wife in public?
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PM Defends Temasek, GIC
5 December 2008
Prime Minister Lee Hsien Loong on Friday defended the performance of state-owned investment companies after a plunge in the value of their stakes in Citigroup, Merrill Lynch & Co and other global banks.
He said the Government of Singapore Investment Corp (GIC) and Temasek Holdings Pte, which manage more than US$100 billion (S$151 billion) of assets each, should be assessed on their overall portfolio returns instead of the performance of specific assets, Bloomberg news reported.
‘The situation looks a lot gloomier now than when they went in but these are long-term investments. It looks under water now, but the situation can change,’ Mr. Lee told the Foreign Correspondents Association at a lunch on Friday. ‘But if you are taking a long-term view, you have to be in on the downs as well as the ups.’
The two companies have invested more than US$23 billion in Citigroup, UBS AG and other banks as financial-services companies seek funds after posting close to US$1 trillion of writedowns and credit losses. A measure of financial companies on the MSCI World Index has dropped 59 per cent this year, the worst among its 10 industry groups, according to Bloomberg.
GIC, which invested US$18 billion in UBS and Citigroup in the past year, has had a ‘respectable’ performance over the last 20 years, said Mr. Lee.
GIC said in September it is boosting investments in emerging markets, private equity and other asset classes to raise returns after cutting back stocks and holdings in developed nations.
Temasek is the biggest stakeholder in Merrill Lynch after a US$5.9 billion investment in the past year. It’s also the biggest shareholder of banks including London-based Standard Chartered Plc and Singapore’s DBS Group Holdings, and holds stakes in Barclays Plc, India’s ICICI Bank and other lenders in Indonesia, South Korea and Pakistan.
Temasek had an average 18 per cent annual return on investment since its inception in 1974. GIC said in September that annual returns in the past 20 years averaged 7.8 per cent in US dollar terms, compared with 7 per cent for the MSCI World Index.
Singapore, which entered a recession last quarter, may remain in one for a year, Mr. Lee said in his address on Friday. A recovery after the recession may take several years, he said.
The government, which brought forward its budget by a month to Jan, will implement measures announced then at once instead of waiting until the next financial year, which begins in April, he said. Still, any measures are not likely to solve the economic crisis immediately, Mr. Lee said.
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