July 2010: Temasak is back on form after a series of crises level buyins & results for the year ending March 2010 showed its assets had hit S$186bn (£89bn), surpassing pre-financial crisis levels.
Temasek's stakes in US-based assets such as Merrill Lynch took a heavy beating in the aftermath of Lehman Brothers' collapse.Temasek, which means "sea town" in Javanese, this year pushed net profits down to S$4.6bn from S$6.2bn as income from portfolio assets fell. Simon Israel, the fund's executive director said the fund had switched its strategy to one almost entirely based on emerging economies.
TEMASAK SINGAPORE WAS IN CRISES
BAD DECISIONS BY HO CHING OR WAS IT BAD TIMING
Feb 2009 :
Ho Ching or Mrs Lee Hsien Loong, wife of Prime Minister Lee Hsien Loong, joined Temasek as a director in January 2002 and was CEO since January 2004. It was good timing that Ho Ching stepping down from Temasak Holding CEO ( Chief Executive Officer) and then released of 31% “Slump” or S$58 Billion downswing after she stepped down? Temasek, which had S$185 billion ($123.2 billion) in assets as at March 2008, has been hit hard due to its 40 percent exposure to banks that have slumped in value due to the global financial crisis. Temasek's $5 billion plus investment in Merrill alone has resulted in a loss of more than $2 billion. Temasek, which has a portfolio of around US$134 billion, bought stakes in western financial firms like Merrill Lynch, Barclays PLC and Standard Chartered PLC. Temasek currently holds a 19% stake in Standard Chartered and slightly over 2% in Barclays but these are now bad mistakes. The sovereign wealth fund also holds about 189 million Bank of America Corp. shares, or a 3.8% stake, after Merrill Lynch was bought by the U.S. bank and Temasek converted its 13.7% stake in Merrill Lynch into Bank of America shares.Temasek lost US$2.3 billion from its investment in Merrill Lynch .
After graduating in 1976, Ho joined Singapore’s Ministry of Defence, where she was assigned to the Defence Science Organization, which adapted and developed weapons systems for the island-state’s fledgling military. Ho joined a Temasek unit, Singapore Technologies Pte, an unlisted holding company for Temasek’s engineering, technology, military and property companies, in 1987. Her first job was deputy director of engineering and knew nothing about finance but why she was elected toi run the company is anyones guess & step down knowing the Company was in dire straits. She rose to president and CEO before “retiring” in 2001 at the age of 48, according to her official resume.
It started in 2006, a Temasek's $3.8 billion investment in Thai telecoms firm Shin Corp SHIN.BK, then owned by former Thai Prime Minister Thaksin Shinawatra, triggered a prolonged political crisis in Bangkok that led to Thaksin's ouster in a bloodless coup for not paying tax.Temasek looks likely to have lost its entire S$400m (US$270m) investment in ABC Learning Centres, the recently-collapsed Australian childcare provider, and there are growing concerns that the fund may have to help bail out the Marina Bay Sands casino project in Singapore as owner Las Vegas Sands creaks under a mountain of debt.
Temasek built multi-billion dollar stakes in the once mighty Merrill Lynch and the UK banks Barclays and Standard Chartered, was bad timing to be putting money into the financial services sector,let alone into Singapore’s nascent casino industry which is going against the wall in the crises. Temasek - under Ho Ching, the wife of Prime Minister Lee Hsien Loong - bought right at the top of the market and then watched its investments slide one after another. Even as the first warning signs of serious problems in the banking sector appeared in the first half of last year, Temasek continued to pump money into the financial services industry with no thought to the possible collapse, which now accounts for 40 percent of its S$185 billion (US$124 billion) portfolio.
The oversight of Ho Ching & her close tiees with the financial services sector saw more investments turn sour. Temasek continued to recruit senior executives from Wall Street, bringing in Morgan Stanley investment banker Michael Dee in August and Rohit Sipahimalani, another Morgan Stanley banker. But these guys were oblivious as to what would happen as buyouts were in the billions of $$$$ & it was only a matter of time when $US1 trillion would be the norm. They the CEOs and bankers want bonuses and big ones so picking a figure in the wind is the way to go and the the higher the figure the better they looked at being in the eyes of the public, the darling to invest in. It wasn't just in Singapore but all around the west as the sub prime became easy and everyone was on a high to make money. The crises had to happen as it was "open pocket spending" with no controls on the worth of any stock or company but noone saw it until USA woke up one day. We noted the crazyiness so read some of our articles. Look at Gold for instance and why sometimes you should be your own Bank.
Temasak got stuck in Australia as well. The rapid demise of ABC Learning, which is Australia’s largest childcare provider, shows that Temasek’s poor investment decisions are not limited to the banking sector. Temasek bought into ABC in May last year at a cool A$7.30 a share and the stock soon headed south as the outlook for the over-hyped operator deteriorated. The shares were suspended at 54 cents each in August but equity investors are likely to lose everything after ABC went into administration because of mounting financial problems. ABC Learning Centres, incurred losses that outstrip its combined previous profits and borrowed billions to start in the USA then collapsed due to bad management and incorrect decisions & investments abroad. ABC Learning Centres, with the childcare chain's bankers are owed more than $1.6 billion in Australia alone.The company said it had appointed voluntary administrators after a "careful review" of its future. Eddy Groves and his estranged wife Le Neve Groves, who founded the business in 1988, were ousted from ABC at the end of September2008. The ASU covers child care workers in local government and is the largest union in local government. ABC Learning and the Federal Government has provided financial assistance to ensure the 1,100 centres with around 120, 000 kids remain open till the end of 2008.
If Temasek were to bail out Marina Bay Sands, it certainly would not be buying at the top of the market but in the meantime it will be hard to attract spenders as the crises does not abate in the USA as the Obama Govt cannot keep bailing out companies like GM, Amex who are old, used up technologies & especially GM who is not innovative and under the Union spell @ $70 hour well below the wage line set at Toyota and the likes??. But it would be an investment decision driven by the need for the Singaporean government to ensure that its casino experiment doesn’t fail-- however the casinos in Macau face problems in this recession or depression we are in as well so everyone is in the same boat. Nervous about the Singapore economy’s narrow reliance on shipping and financial services, the socially-conservative government & its PM took the controversial step of legalizing casinos in 2005---bad timing will now cost them a lot more.
Having staked its reputation on partnerships with the likes of Las Vegas Sands and Malaysia’s Genting (which won the licenses to operate the two casino resorts), the government is now desperate to save the casinos and it will as it has no option. But already Las Vegas Sands has indicated it cannot meet committments and needs help. This has started the ball rolling in a slide. Casino operators like Las Vegas Sands Corporation, Wynn Resorts Ltd, and MGM Mirage are all having a bad year as the spreading financial turmoil and the global economic slowdown sucks out the would be gamblers. Las Vegas Sands Corporation’s high over-investment in casino projects in Macau, Las Vegas and Singapore have sent its stock price down from a high of US$140 per share to US5$ per share in the space of barely a year and now it owes money. The collapse of banks like Lehman Brothers Finance Asia and Merrill Lynch International Banks for a S$5.25 billion (RM12.6 billion) loan is secured by Marina Bay Sands. The two American banks were among the lead arrangers for the loan, along with local banks like DBS Bank, United Overseas Bank and OCBC Bank. Sands stand to lose their deposits of S$200 million each and the Government could repossess their land under this penalty but our bet is that the Singapore Govt will take over using Temasak or another dept as the holding Company??? It has to too keep face as well as the project has already been started but it will be a long haul to recoup profit mode as the crises will deepen into 2010.
While Sheldon Adelson, the tycoon behind Las Vegas Sands, said he will complete the Marina Bay Sands resort, we now believe it is more than likely the government will step in, probably under Temasek or one of its linked companies. Adelson’s gaming empire is in bad shape and has had to stop construction in Macau of its huge Cotai Strip development opposite its Venetian complex which is intended to house various 5-star hotels as well as a casino. The Macau government has said -- according to the Financial Times- that it won’t allow any casinos to close and will take them over if necessary. Of course they will as Casinos are Chinese wants and they love them. However it seems that commitment does not extend to helping out partly finished projects so better to take them over themselves ---this is the norm anycase. Casino giant Las Vegas Sands Corp promised it would pay US$3.8 billion in debt on Dec. 31 if its operating earnings this calendar year did not equal at least 13% of net debt, which subtracts cash on hand. The debt at issue is a credit facility secured by the company’s Palazzo and Venetian casinos in Las Vegas and an attached mall and convention building. With its Macao and Singapore projects lagging badly, Las Vegas Sands has tasked a new executive team for its Asian portfolio. Operating income fell 81% to Feb 2, 2009) US$14.6 million in Las Vegas, 39% to US$38.7 million at Sands. With the lending banks in difficulty as well the\y will recall loans back earlier than expected for sure so where does this leave Sands.
The Las Vegas-based Sands company owns and operates The Venetian Resort-Hotel-Casino, The Palazzo Resort-Hotel-Casino, and the Sands Expo and Convention Center in Las Vegas and The Venetian Macao Resort-Hotel and the Sands Macao in Macao. The company also owns the Four Seasons Hotel Macao and is building two additional integrated resorts -- Sands Casino Resort Bethlehem in eastern Pennsylvania, and Marina Bay Sands in Singapore. LVS is also building the Cotai Strip, development of resort-casino properties in Macao. At completion, the Cotai Strip will feature approximately 21,000 rooms from world-renowned hotel brands such as St. Regis, Sheraton, Shangri-La, Traders, Hilton, Conrad, Fairmont, Raffles, Holiday Inn, and InterContinental. For more information, visit www.lasvegasasands.com
But will this be enough to attract the spenders back ?? “If Las Vegas Sands cannot cough up its share of equity, the Singapore government is likely to step in,” said Donald Chua, an analyst at local stock broking firm CIMB-GK, in a research note. “A viable option would be a 49:51 joint venture between the Government and CapitaLand, with CapitaLand taking a controlling stake.” We know the Government will step in as really it has no choice but it will get something that will turn around one day if related costs stay in line as spenders will have a choice of where to go. Even in Thailand if the deposed PM Thaksin Shinawatra returns then Thailand will have its first casino so Singapore needs to be aware that Thailand does have affordable & excellent tourism far better than anything Singapore has on offer. It also can muster the faciltities, the funds, the tourism and price structures far better than what Singapore and Macau can offer and lets also think about Cambodia getting into the act together with Casinos in the South like Kohkong. It will be a rough ride ahead for these Asia casinos to finish and start without debts mounting but we feel it could be a saviour for Thailand as casinos have been banned for many years and those out of power at present want to start the ball rolling by bringing them in??? It could be good timing for Thailand to just sit back and wait.
In the meantime Singapore-based brokerage UOB Kay Hian said that the syndicate of banks providing the S$5.4bn ($3.6bn) debt facility for the construction of Marina Bay Sands could seek a new investor, hinting that they could turn to 40pc-Temasek-owned CapitaLand, a property group that was involved in unsuccessful bids for both casino licenses. CapitaLand has not held any talks with Las Vegas Sands but said that it was “strategically watching the situation and studying opportunities related to distressed companies or assets.” And, despite Las Vegas Sands’ assurances, the Singapore Tourist Board stressed this week that it has a number of options should the project fail, including taking possession of the development site which at the moment makes sense.While Temasek or CapitaLand may be able to pick up a stake in the Marina Bay casino on the cheap, gambling is one strategic industry that the government did not want end up owning. The government originally opted for international gaming companies like Las Vegas Sands and Genting because it thought they had the experience and clout to build world-class casino resorts that would attract gamblers from around the globe. While the Marina Bay Sands is unlikely to be re-branded as the Temasek Casino, whatever happens, gaming analysts doubt whether a government-backed resort would have the same draw as other Casinos will rise in other nearby countries.
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With the impact of the financial crisis hitting the global economy hard, there are likely to be more disappointments ahead for Temasek in the coming months. But Temasek is not required to disclose regular financial results, as it has been given the status of an exempt private company despite being owned by the Ministry of Finance. So the people of Singapore, whose money Temasek is ultimately controlling, will probably have to wait when the fund is expected to release its next annual review, to find out exactly how badly it has fared over the past year. Not good for shareholders at all and will they tell all in their report??.
Temasek leaped heavily into one of China's highest profile, and perhaps more vulnerable, property developers, Country Garden. When it went public in Hong Kong in April 2007, Country Garden was the second largest IPO in Hong Kong history, with Temasek joining local tycoons Lee Shau Kee and Robert Kuok as key investors. According to the mainland financial magazine Caijing, a subsequent S$800 million convertible bond issue in Singapore in February this year was made on terms which suggest the company is very stretched and badly needs to keep its share price from falling. It is now little more than half its initial price and down 75 percent from its peak. It cannot sell properties in Hong Kong but uses the excuse the properties are in oversupply as they were completed earlier than expected?? Remember that with the sub prime properties boomed agin in Hongkong but they are now sliding back in line to pre years.
OTHER SINGAPORE COMPANIES:
Australia, once seen as a safe if unexciting location for Singapore cash, has also attracted top of the market deals from Singapore Power. Already well-established in Australia, it paid heavily in cash for the eastern Australia assets of pipeline company Alinta but with values in decline they have been unable now to flip them into their 51 percent owned local subsidiary SP Ausnet leaving SP meanwhile saddled with huge borrowings.Singapore-based firm SP Ausnet, which is responsible for maintaining most of the power lines in eastern Victoria is now being sued for broken lines that lead to bush fires. SP Ausnet company's liability will be capped at $100 million, under a deal struck by the Kennett government when state firms were privatised in 1995 but it is a worried thought. "It is believed that the claim will be made on the basis of negligent management of power lines and infrastructure," this means the state government could be forced to cover a shortfall of hundreds of millions of dollars.
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It started with Soochow and then that Thai Shinawatra buyout telecoms company and on and on. Ho Ching had so many funds that she could afford all the accumulative losses in the billions? She had a bottomless pot of money stashed in Temasak? And its all in one family and she new it but she bailed out quick?
SINGAPORE - PRIME MINISTER (also Singapore Minister of Finance whose duties include overseeing all government-linked/related entities): His name is LEE HSIEN LOONG and his bobbying go the casinos started & I would think gave his wife a job.
TEMASEK HOLDINGS - CEO:
HO CHING, Prme Minister Lee's wife the head of Temasak who resigned just prior to reporting the losses in the Billions of $$$$
GOVERNMENT OF SINGAPORE INVESTMENT CORP - CHAIRMAN:
LEE KUAN YEW, ex-Prime Minister, present Minister Mentor and father of Prime Minister Lee. Just a coincidence of family ties.
The showdown with Temasak will be what the new CEO will do. Goodyear is an American and may ask for the same bailout as his counterparts which will mean the help from Singapore Government. As for Ho Ching she doesn't have to worry as not her problem but the shareholders are affected and will be as this company is deemed a "private company" so theres no holds on what they can do with the funds invested??? great for some I guess but rest assured the Singapore Government will make sure that Temasak will not go down.
Read more on Straits Times, BBC news
We have yet to see subprime hit Thailand --- it will as the banks are saying nothing yet hiding behind a charade & the politicians are more concerned about getting ministries & fill their pockets more. Condos in Bangkok are plentiful and Property Investors are saying there is not enough condos here but they normally say this so people will invest. If you borrow you are in for a shock. If you have excess funds to play with OK but stay away from fund managers & hold on to your money --- better still listen to us and buy condos only not 30 year leases in Thailand under Estate managements and just buy what you need. But check out the condo and Company first if they have mortgages? The rest invest in gold & silver is our fix . [ Read more about Fund Managers ]
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If you had purchased $1,000 of shares in Delta Airlines one year ago, you will have $49.00 today. If you had purchased $1,000 of shares in AIG one year ago, you will have $33.00 today. If you had purchased $1,000 of shares in Lehman Brothers one year ago, you will have $0.00 today. But, if you had purchased $1,000 worth of beer one year ago, drank all the beer, then turned in the aluminum cans for recycling refund, you will have received a $214.00. Based on the above, the best current investment plan is to drink heavily & recycle. It is called the 401-Keg.
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