GIC’s First Ever Report
GIC, possibly the 3rd largest SWF globally, is estimated to have over $300 billion in assets. The annualised return over 20 years is 4.5%, or 90% returns, a modest figure. Whether it is good or bad, it is hard to say unless we know what kind of assets were invested in. Still, although GIC is estimated to have lost 44% of its holdings from 2 years ago and considering the ongoing earth-shaking and giant-slaying market correction, it is a comforting wonder that GIC is still afloat, for now.
GIC has large cash pile, sees opportunities in US
By Kevin Lim and Saeed Azhar
SINGAPORE (Reuters) – Singapore sovereign fund GIC said it still had plenty of cash after its multi-billion dollar investments in UBS and Citigroup and saw opportunities in the United States amid the financial storm.
The Government of Singapore Investment Corp, which manages assets estimated at around $300 billion, held 44 percent of its portfolio in stocks and about 7 percent in cash at end-March 2008, it said in its first-ever annual report on Tuesday.
“Problems in the U.S. would present very interesting opportunities in impaired assets,” Group Chief Investment Officer Ng Kok Song said at a press conference, although he added the investment environment was the most challenging since the fund was founded in 1981.
GIC released its first annual report after Singapore agreed with Abu Dhabi and the U.S. to a voluntary set of principles for sovereign funds, aimed at allaying Western fears that their investments are politically motivated.
GIC painted a bleak outlook for the global economy, saying efforts by the U.S. government to bail out its financial sector would need time to take effect.
“We should not assume that the worst is over and we continue to be watchful and prudent in our assessment of the economic risks and in our investments,” said Deputy Chairman and Executive Director Tony Tan.
Ng said GIC planned to increase its exposure to emerging economies, “particularly Asia because this is where the growth potential is and this our backyard.”
“We are seeing a lot of opportunities both in public markets as well as private markets such as real estate,” Ng added.
GIC, the world’s third largest sovereign wealth fund according to Morgan Stanley, has emerged in the limelight in recent months following its high-profile investments in Citigroup.
The fund, which manages the bulk of Singapore’s foreign currency reserves, says it manages well over $100 billion although many analysts say the figure is around $300 billion.
Tan said GIC released its first annual report because it believed “such clarity and disclosure will benefit both the Singapore public and the international investment community.”
PERFORMANCE
GIC said in its annual report that it achieved an average real return of 4.5 percent per annum in Singapore dollar terms over the 20 years to March. In nominal terms, its Singapore dollar returns was 5.8 percent, down from over 8 percent in 2005.
The fund’s nominal return over the same period, when measured in U.S. dollars, was 7.8 percent, it added.
GIC said 34 percent of its portfolio was invested in the United States, another 35 percent in Europe and 23 percent in Asia. The Americas and Australasia accounted for the remainder.
The state investor also said that 26 percent of its portfolio was in fixed income and 23 percent in alternative investments such as real estate and hedge funds.
Ng said GIC suffered some “mark-to-model” losses from its investments in UBS (UBSN.VX: Quote, Profile, Research, Stock Buzz) and Citigroup (C.N: Quote, Profile, Research, Stock Buzz) convertible notes, but believed the two would generate good long-term returns.
The firm owns convertible notes that, if exercised, would give it about 9 percent stake of Switzerland’s UBS and around 4 percent of Citigroup.
Ng also said the firm’s losses from its investments in the two banks had been minimized through reset clauses in the original investment agreements.
Analysts said sovereign funds may become more cautious.
“They had invested early on in the crisis, but their first bite had been costly because markets fell,” said Song Seng Wun, Singapore-based senior economist at Malaysian investment bank CIMB, when asked about GIC.
“With the current uncertainty I think most of the sovereign wealth funds will be more selective in looking at what’s on their plate. There will be opportunities in OECD countries which deflate from the excesses of the past,” he added.
(Editing by Neil Chatterjee)
Stand Off in Malaysia
Anwar wrote a letter to the Malaysian PM to discuss the transition of power as the former has the numbers to force a change of government. Meanwhile, Law Minister Zaid Ibrahim resigned over the abuse of the ISA in the detention of a blogger, a journalist and an opposition politician. The charge was for racial incitement and we are left to ponder why Ahmad Ismail from UMNO who started the whole ugly charade was also not detained under the ISA. Zaid’s resignation, but not defection yet, is part of the loud visual drumming of support for BN leaders to defect on September 16.
By tomorrow, there might be a new boss in Malaysia. Or there might not be, and another round of ISA arrests would begin.
Malaysia’s Anwar says he will soon seize power
KUALA LUMPUR, Malaysia (AP) — Opposition leader Anwar Ibrahim pledged Monday to oust Malaysia’s entrenched government and brazenly urged the prime minister to hand over power “smoothly and peacefully.”
As he addressed a rally of some 10,000 supporters, however, Anwar said he would not meet a self-imposed Tuesday deadline to topple the government through parliamentary defections and instead hoped to negotiate a transition.
“We do not want to force it. We do not want to go to (the capital) Putrajaya and drag them down. Therefore, we want to negotiate with the prime minister and ask him, ‘Do you want one week, do you want two weeks?’” Anwar said.
The comments were certain to add to the pressure on Prime Minister Abdullah Ahmad and his ruling National Front coalition, which is already in a disarray because of dissent and a festering rebellion against Abdullah’s weak leadership after disastrous election results in March.
Earlier in the day, Anwar sent a letter to Abdullah saying he had enough support to form a government and asking the prime minister for a meeting to discuss the “transition of power.”
“We want the transition of power to be done smoothly and peacefully. We have the numbers and we are ready … to form the government,” he said.
The letter could, however, be seen as a show of bravado meant to scare the National Front.
Thousands at the evening rally chanted “Reformasi,” or reform, and “9-1-6″ — a reference to Sept. 16, Anwar’s original deadline for removing the government through ruling coalition defections.
“The people will rise to build a system of true democracy,” Anwar said to loud cheers from the audience.
Opposition leaders who spoke before Anwar gave a new interpretation of the deadline date, saying it was the beginning of a campaign to oust the National Front, which has been in power uninterrupted since 1957 when Malaysia gained independence from British colonial rule.
“It doesn’t matter whether it happens tomorrow, the next day or whenever. People want it to happen. The 9/16 movement will begin seriously tomorrow,” said Lim Kit Siang of the Democratic Action Party.
Kamaruddin Jafar, a leader of the Pan-Malaysian Islamic Party, or PAS, said “tomorrow we will begin a clear movement toward a change of government.”
Anwar’s People’s Justice Party, PAS and DAP formed a coalition before the March 8 general elections, winning an unexpected 81 seats in the 222-member Parliament. With the support of an independent member, the alliance is 30 seats short of a majority.
It was the worst electoral result ever for the National Front, and triggered an undercurrent of dissent against Abdullah that has become a torrent in recent weeks.
In a sign that the government is panicking, on Friday it arrested an opposition lawmaker, an anti-government blogger and a reporter under the Internal Security Act that allows indefinite detention without trial. The act is normally used for people regarded as security threats.
The journalist was freed Saturday but the other two remain in jail.
“Some people doubted whether a change of government should occur. But the ISA arrests have convinced them that it should,” said Lim, the opposition leader.
The use of ISA has been criticized by lawyers, human rights groups and even some Cabinet ministers. On Monday, the minister in charge of legal affairs, Zaid Ibrahim, submitted his resignation to Abdullah in protest.
Abdullah, however, said he has not accepted the resignation and told Zaid to “think carefully.”
“If he is tired, he can take a leave … a short one will do,” Abdullah told reporters.
Barbarians at the Gate
The Serangoon Gardens estate controversy over 1,000 foreign workers to be housed in a disused secondary school in the vicinity is more than mere xenophobia and more than mere class distinction. The issue is slowly evolving into one of how citizens are actually petitioning, a “real” one instead of an online one, against a government decision to settle workers in their part of Singapore.
The residents are reasonably worried about safety and crime, the “quality” of the living environment, and in their unspoken minds, the property value of their homes if foreign workers descend upon their village that has almost a cult status like Holland Village and Siglap. Furthermore, property value is important in the Singaporean psyche homes are proxies for one’s status, wealth and from the Singapore government’s perspective, rootedness to Singapore in general.
Can the government and Serangoon residents negotiate a settlement amicably without political cost to the PAP in time for the next election and Aljunied GRC contest? How would that settlement take shape?
This face-off between residents and the government is interesting to watch. Can the government be flexible enough to meet the demands of a minority vociferous population which has reasonable grounds for grouse? One solution the government might propose, as foreign workers vital to our economy need to be housed urgently in decent living conditions, is that the housing solution for the core of Singapore’s new (migrant) working class is merely temporary until a more permanent solution and structure is ready for the foreigners. In the meantime, there would be a police post set up in Serangoon and “cleaning” in the area, as well as other gestures to placate the Serangoon residents.
Readers, you have to decide if I’m being sarcastic here. From all of us living in the rest of Singapore, we should think that Serangoon Garden residents should suck it up because if they don’t agree to have the workers housed there, the realistic fact is that foreign workers might be at our gates instead. NIMBY, just like we wanted the Opposition to win a GRC in the last election, like Aljunied, but as long as it is not in our ward.
SPEAK UP, AND be connected
As in Serangoon Gardens episode, dialogue between Govt and the people can aid in policy-making, decisions
Monday • September 8, 2008
P N Balji
editorial director
balji@mediacorp.com.sg
IT IS unfortunate that the Serangoon Gardens episode is being framed as a them-versus-us debate, for it hides from the mind’s eye some of the undercurrents swirling around issues such as policy-making, citizen activism and political response.
Somebody, somewhere and somehow involved in formulating policies should have known that the proposal, even the thought, of turning a disused school in the estate into a dormitory to house foreign workers was going to be a non-starter.
Serangoon Gardens is not another private housing estate in Singapore. As one resident describes on his website, it is an oasis of spaciousness and tranquility. Going through his website that is flush with pictures of picturesque streets, “fairy-tale like cottages” and eateries, you will understand why they want their cosy neighbourhood untouched and undisturbed.
If policy-makers had understood this important sentiment, the plan would not have gotten out of the brown file of the Ministry of National Development and led to a petition culminating in not one, but two, Minister Members of Parliament (MPs) going down to meet the residents on Wednesday.
All civil servants watching this drama unfold before them should take away this simple lesson in decision-making. A proposal that looks good on paper is not necessarily good when it comes to implementing it in the real world.
From a big picture point of view, the former Serangoon Gardens Technical School was a neat fit for a labour-starved and space-pressured Singapore scratching its head looking for half-way houses for foreign workers until the 11 sites earmarked for permanent abode were ready for accommodation.
In the midst of this, news leaked out that the disused school in Serangoon Gardens would be one such half-way house. The residents kicked up a fuss, petitioned MP Lim Hwee Hua and made sure their voices were heard during a meeting last Wednesday night.
A resident who was at the meeting appeared satisfied with the outcome. “This is citizen activism at work. We were unhappy with the way this whole thing came out into the open.”
He was upset the plan made the rounds in unofficial circles and that 1,000 foreign workers would descend on the estate, where he has lived for 20 years, to be his neighbours. Issues of security, litter, noise, molestation, illicit sex and the value of properties were all being dragged in.
The residents must have thought they had a good case to kill the plan before it gets traction higher up in government hierarchy. But at the back of their minds, the successful petition by a group of pregnant women to get the Government to dish out the new baby incentives on Aug 17, when Prime Minister Lee Hsien Loong made the announcement, and not on Jan 1, when they were supposed to come into force, must have weighed heavily.
Such activism will grow and policy-making in Singapore will have to have one more item seared into its process: The lessons of Serangoon Gardens.
In the case of the baby incentives, the Government was quick on the draw when it agreed immediately to back-date the implementation date to Aug 17.
We have not heard much about the plan to build a funeral parlour at Sin Ming after residents protested. And now the Serangoon Gardens episode, which if reading what Mr George Yeo and Mrs Lim said at the Wednesday meeting is anything to go by, is likely to be buried as well.
Foreign Minister George Yeo’s presence at the meeting is significant. The Serangoon Gardens ward comes under Mrs Lim, Senior Minister of State for Finance and Transport, and is part of the Aljunied GRC that became a flashpoint at the last General Election.
Mr Yeo, who heads the PAP team that looks after the GRC, could have left it to Mrs Lim to deal with the issue.
The intervention of this busy and heavyweight minister and his appearance at that dialogue with the residents representing 6,000 households can only mean one thing.
The old-fashioned way of connecting with constituents, whether in Serangoon Gardens or Sengkang, cannot be wished away. Nothing changes when it comes to politics.
Malaysia, Japan, Thailand – In. Out. Out?
In Malaysia, Anwar is on the way in despite UMNO giving the impression that they are teaming up with PAS against Anwar’s pro-minority stance. Thwarted 10 years ago by his benefactor Prime Minister turned enemy, Anwar is on his way back to revitalise Malaysian politics proper. Permatang Pauh is made up of 69% Malays and 31% non-Malays and still Anwar won, showing that race-based politics might be on its way out in Malaysia. Better than the kris-waving during the UMNO General Assembly was Anwar’s progressive plea of “Anak Melayu Anak Saya, Anak Cina Anak Saya, Anak India Anak Saya…”
But can Bapa Reformasi really hold on to the Indian and Chinese votes without losing Malay votes in the rest of Malaysia? A Malaysian Malaysia proposed by the PAP and Lee Kuan Yew was drowned out by cries of the need for bumiputra dominance about 40 years ago. This time around, there might still be hope that cries of ketuanan rakyat or people dominance would silence that of ketuanan Melayu or Malay dominance. Malaysia needs Anwar.
In Japan, Fukuda, thwarted at every turn since the Democratic Party of Japan dominated the upper house in July last year, is out meaning that Japan has 11 Prime Ministers in 15 years. Now that is really a disruptive revolving door premiership. While Abe at least could explain his way out that he was ill, Fukuda just threw in the towel like that. Nevertheless, in a snap poll, the Japanese however still want LDP to be in-charge rather than the opposition. However, Japan is going to be very unpopular with the rest of Asia if LDP allows colourful hardliner Aso to be the next PM. Japan just needs another charismatic Koizumi.
In Thailand, poor Samak is having a hard time and being pushed into a corner. He is getting nervous and even shutting down anti-PPP sites presumably. By invoking an emergency, the die is cast and if the PAD squatters don’t disperse, would the military have the commitment to drive them off? If they don’t, Samak loses face and power and his time as premier is fast running out after a 3-month standoff with the PAD mob. Thailand is on the brink of another coup and another democratically PM with rural support to be shown the door. Maybe that is why the King Never Smiles in Thailand with all this military-monarchy-mobocracy trouble mocking Thai democracy. Although Thaksin is out of the political picture for now, PAD wants to be sure and exorcise all remnants of his TRT shadows out of parliament, including Samak. Bangkok Thais don’t need another Thaksin.
