|
Coffee Shop Talk of a non sexual Nature Visit Sam's Alfresco Heaven. Singapore's best Alfresco Coffee Experience! If you're up to your ears with all this Sex Talk and would like to take a break from it all to discuss other interesting aspects of life in Singapore, pop over and join in the fun. |
|
Thread Tools |
#1
|
|||
|
|||
New Finding: Foreigners, Not SGs, Are Allowed to Benefit from Temasick. WHY?
An honorable member of the Coffee Shop Has Just Posted the Following:
Chris K: My interpretation of Temasek’s statement June 7th, 2014 | Author: Contributions Here is my brief interpretation of the Temasek statement released on June 4th on what was said about CPF as the Temasek spokesman has spoken outside his remit. Stephen Forshaw: “Temasek does not invest or manage the savings of CPF members.” The writer agrees with the spokesman even though the final outcome can only be absolutely proved by an audit. First the writer will give his reasons intuitively and then mathematically. Intuitively, given the fine record of the government of keeping the goodies to itself, the writer finds it hard to believe that the superior returns of Temasek are not kept all to itself rather than have it pay for the interests the government owes to CPF, however paltry these interests may be. Then mathematically, Temasek generated a 20-year rolling rate of return of 14%. This is clearly reported in the Temasek Review and explained by the Ministry of Finance. Temasek delivers 50% of its Net Income not net returns to the government for spending under the Net Investment Returns Contribution framework. Net income is different from net returns and is comprised of the dividends it receives from its portfolio companies and any realised profit or loss resulting from sale minus cost of running Temasek. Unlike an investment fund like GIC, Temasek cannot monetise its returns because to do so will change its majority control of its portfolio companies. After deducting the NIRC and keeping the rest of its income and valuations, the writer surmised that Temasek balance sheet grows at a pace of 9% pa over 20 years. So let us discount the current balance sheet of $215b at 9% pa over 20 years to arrive at the starting point 20 years ago. The number is $41b. Does this look like CPF monies to anyone? At least to the writer, it does look very much like the value of GLCs transferred to Temasek at nominal prices, having that value boosted to $41b by IPOs. Finally, let us read carefully what the MOF says about the NIRC: …comprised up to 50% of the net investment returns on the net assets managed by MAS and GIC and up to 50% of the investment income from the remaining assets which includes Temasek”. The crucial words in the paragraph are net assets, in which liabilities are netted out of the returns from MAS and GIC. Liabilities are what the Government owed to CPF via the purchase of SSGS and investors in SGS. Notice the change of language as these words are not cited in relation to Temasek. This tells us that CPF monies are not in Temasek. After all, one pays interests only to one’s debtors, right? By the way, the $8.1b Pioneer Generation Package is paid out of the NIRC as stated by DPM Tharman in Parliament. There are some in the public who hold suspicions that CPF monies “are gone”. If the monies are really gone, all the remaining returns have to pay CPF interest if the government is to avoid a debt default. This leaves nothing for the NIRC and the PGP would not have been funded. Stephen Forshaw: “We thank readers for their interest in Temasek, and look forward to the day when it is practical for us to issue Temasek Bonds to retail investors to give them another option to save for their retirement.” No thanks, you are saying little. But the writer wishes to draw your attention to the issue of Temasek Bonds to retail investors. Presently, Temasek Bonds have about $10b of bonds outstanding, some of which has a high coupon rate of 5%. Do note these are denominated in foreign currencies like GBP and USD – these currencies command higher interest rates. Now if Temasek were to reduce the certificate size of their bonds from 100,000 to 1,000 – the bonds are within reach of retail investors. However, do not hold your breath, any S$ bonds aimed at retail investor will have more or less the low rates of SGS. The more interesting issue about retail bonds is that Temasek already have structures which allow co-investments by outside investors; asset managers and private equity funds to enjoy the superior returns of Temasek whatever that may mean. But readers should ask this question, why are foreigners allowed to benefit from Temasek’s returns but not citizens? If Temasek were to launch retail bonds that are linked to co-investments or to the underlying performance of its portfolio, then the next question: should CPF not invest in these to generate better returns for its members than the poor returns provided by SSGS? In conclusion, the writer provides 10-year comparative rates of return of GIC and Temasek in excess over the average CPF OA and SMRA rates. 10 year returnExcess over OA RateExcess over SMRA RateGIC5.3%+2.8%+1.3%Temasek7.5%+5%+2.5% Notes:
Chris K * Chris K holds a senior position in a global financial centre bigger than Singapore. He writes mostly on economic and financial matters to highlight misconceptions of economic policy in Singapore. Click here to view the whole thread at www.sammyboy.com. |
Advert Space Available |
Bookmarks |
Thread Tools | |
|
|