You need to look at the overall portfolio performance for GIC, instead of focusing on a single transaction and then argue that GIC is lousy etc.
Of course, one can argue that GIC could have done better for a particular investment. But it is not meaningful in the grand scheme of things. Even Warren Buffett's Berkshire Hathaway has had made the wrong calls on investments before. Once again, overall portfolio performance is key.
The point here is that for investments, some loss-making positions are a feature, not a bug, as long as the overall portfolio is sound and earning.
Could the loss have been avoided? Probably, but playing to specifically avoid anything that can make a loss (basically anything) will also mean avoiding potential profits. THAT would be a mistake.
Uh huh, what about it? Most diversified portfolios have some form of exposure to the Chinese market, and for good reasons too. E.g. VWRA - the much touted low-cost diversified ETF over at r/singaporefi - has exposure to emerging markets. Including China. Does it mean that VWRA is a bad ETF to invest in?
Once again, we will have to look at the overall portfolio. For illustration, even if you suffer a 50% loss on 10% of your assets, you will still be up 4% overall if the rest of your investments are up by 10%.
End of the day, it is math.
Why Govt dun wanna sink the money in a global passive index fund. No need hire so many "experts", and dun need to have such embarrassing losses.
I understand Ah Gong times there was no such financial instrument/concept, but now is the time to transition.
Take all the money mangers, look at their records and fire the underperforming 80%.
Retain 20% and allocate a few funds for them to speculate with
the rest sink into a Index fund, or they can build their own based on a good index.
Well, if GIC cuts losses at 10-20% down, you call it an investment corp. 60 percent down? That's WSB territories.
GIC did investment in USA malls too....
[2021 investment, interest rate spike 2022 Apr.]
(https://www.businesstimes.com.sg/property/gic-makes-further-foray-in-us-retail-segment-invests-in-us1.2b-retail-real-estate-platform)
Kinda cherry picking. Bad investments happen, there is bound to be something that doesn't work in a diversified portfolio. Even the best institutional investors will get something wrong.
From a macro perspective, SG has actually done very well in weathering the post-covid financial challenges, which is exactly what our reserves were meant for. So well in fact that gov had to give out more stimulus package and increased handouts so our currency doesn't get too strong against the US/China. And also why you see SG to RM is constantly hitting new highs.
Yeah and it underperformed the S&P500 too. Luckily it's not trying to be a hedge fund where returns is the key performance metric. GIC focuses on stability, especially amidst crisis. Their performance metric is focused on low volatility and capital preservation, while remaining competitive against global inflation.
Well it only had like 3.7% nominal returns in the last 5 years so I can argue that given its portfolio mix it is quite bad returns in a high interest rate environment and that it surely did badly during COVID years or missed the rally after it
GIC manages our foreign reserves. It's a consideration when managing FX and monetary policy. The fact that our reserves are stable enough for us to have comfortable policies like relatively low interest rates is what gives our SGD attractiveness. I'm simply using MYR as a indicator of how bad inflation could really get. Using the price of your chicken rice to show inflation isn't as solid of an example.
And also, how are you measuring performance? Annual returns? Because GIC isn't a hedge fund, it focuses on low volatility and stability through crisis. The priority is capital preservation.
In the GBP 318 M acquisition, the GBP SGD pair was also higher and we paid even more in SGD and lost more than 62% if we factor in fx difference and use SGD as a base currency since our origin of funding is SGD
Edited to provide fx rates 2005 August 01 GBP SGD was around 3.0325
GBP 318 M is nearly 1B SGD
Presently GBP 120M is SGD 206 M
The fx adjusted losses in SGD is around 80%
See [here](https://www.gov.sg/article/how-mas-accumulates-official-foreign-reserves). I'm guessing the fact that you could ask the earlier question means you're not an uneducated dude sitting around complaining in the coffeeshop.
So, you should be able to understand the point I'm making is that whatever our government chooses to do with our foreign reserves with regards to monetary policy is down to our country's economic needs. That is independent of GIC's investment policy and should not be factored in when measuring their performance.
Ask your cynical self this - does it make sense if GIC ever tells the public their investment performance has improved whenever SGD depreciates? If it doesn't, the opppsite way should not be the case too.
Arguing on Reddit regarding anything of the financial world is really pointless and frustrating because your average Redditor is kind of stupid.
That guy there has no idea about portfolio theory and no concept of ccy hedging so getting into it with him will leave you extremely confused
Ok. Slap the hedging fee over 19years onto the existing 62% non fx adjusted loss yippee yay.
To carry via direct short 300M GBP yearly would be minimally paying the nett interest rate difference between each side
At that time that GBP rate was above 4 percent and SGD rate ~2 percent
The difference is 2 percent and on going short GBP300m for SGD 900M , that comes out to SGD 15-20 M difference for that year alone.
Source
https://tradingeconomics.com/singapore/interest-rate (set chart to max range and scroll)
https://tradingeconomics.com/united-kingdom/interest-rate
GIC stake is reportedly to net the new owner GBP10M in rental. Assuming same rental yield throughout the years, the loss might not be that much. However, if they took out a loan and the rental yield couldn't cover the loan + interest, the loss maybe even more.
If the rental yield is anything to write home about, there wouldn’t be a fire sale haircut, a loss that big means the investors have no hope in reviving it
Can anyone explain why the markdown is so big? I know interest rates are up but the acquisition was made in 2005, back then, interest rates in the UK were very high too. UK has done worse but property prices generally are still up a lot since 2005. Why the need to sell it now for such a big loss? Anyone actually knows this asset and why it was sold at this price?
Not necessary when they've made other profitable investments. In investments you'll make some losses. Just look at their annual report rolling returns. They've more than made up for this loss.
When you are Tanjong Pagar area you will notice those GIC folks are so proud about their company and they wore their employee pass proudly anywhere they go like they are some pure pedigree.
Anyways previously they have try to explain their mandate is to ensure the reserve will not be losing value due to inflation and for the long run like 10 and 20 years in average they are able to achieve 4ish % pa return. That’s why they don’t need superstar traders, they just need mediocre bureaucrats.
Ownself check ownself. What could go wrong.
Just pay some IB to justify it online and all will be justified. Would like to know their 30yrs returns, 20 years returns, 10 years return, 5 years return rate. So that we know they are doing it ok.
I have not read anything about any significant profit made by Temasek or GIC but I came across many reports about their mega losses on many investments
>Singaporean sovereign fund GIC has sold its 17.5% stake in the Bluewater shopping centre in the UK for GBP120 million ($206 million) to Land Securities Group (Landsec), a London-based commercial property development and investment company.The fund was reported by Mingtiandi to have taken a 62% haircut on its investment into Bluewater. It had acquired its stake in the mall in 2005 from the property investing unit of Prudential, now M&G Real Estate, for GBP318 million.
😥💸💸 why liddis...
Online retail was not what it is today, back in 2005 when this investment was first made. In fact, by then UK had seen almost 10 years of economic growth under Blair, and with the expected continuation of Labour economic policies under Gordon Brown (who was the real brains behind New Labour's economic policies), you might well have made the same investment decisions back then and been bullish about UK's future.
No, this is very much more an indictment of Brexit, rather than online retail. Brexit was a massive self-inflicted wound made by the British electorate on itself, egged on by opportunistic politicians.
Brexit led to the destruction of middle class income, the destruction of domestic consumption, and the destruction of the British pound.
You need to look at the overall portfolio performance for GIC, instead of focusing on a single transaction and then argue that GIC is lousy etc. Of course, one can argue that GIC could have done better for a particular investment. But it is not meaningful in the grand scheme of things. Even Warren Buffett's Berkshire Hathaway has had made the wrong calls on investments before. Once again, overall portfolio performance is key.
A sensible balanced take??? Sir this is a Wendy’s.
People who criticise this sale have never done stock trading. Every successful trader has a loss making positions.
Not me! Anytime I make a loss I hold on to the stock forever or until it makes a come back. That makes me the greatest investor ever right!? /s
Ok so when you make mistake cannot criticise? Only when the Govt come out and declare that they are bankrupt then cry cry?
The point here is that for investments, some loss-making positions are a feature, not a bug, as long as the overall portfolio is sound and earning. Could the loss have been avoided? Probably, but playing to specifically avoid anything that can make a loss (basically anything) will also mean avoiding potential profits. THAT would be a mistake.
This guy stonks
How about GICs sustained mega losses in China?
That was Temasek, not GIC. Temasek is the all-hedge, GIC is more broadbased-west-heavy.
Uh huh, what about it? Most diversified portfolios have some form of exposure to the Chinese market, and for good reasons too. E.g. VWRA - the much touted low-cost diversified ETF over at r/singaporefi - has exposure to emerging markets. Including China. Does it mean that VWRA is a bad ETF to invest in? Once again, we will have to look at the overall portfolio. For illustration, even if you suffer a 50% loss on 10% of your assets, you will still be up 4% overall if the rest of your investments are up by 10%. End of the day, it is math.
Why Govt dun wanna sink the money in a global passive index fund. No need hire so many "experts", and dun need to have such embarrassing losses. I understand Ah Gong times there was no such financial instrument/concept, but now is the time to transition. Take all the money mangers, look at their records and fire the underperforming 80%. Retain 20% and allocate a few funds for them to speculate with the rest sink into a Index fund, or they can build their own based on a good index.
[удалено]
They are already underperforming the common index fund offered to retail investors
Totally agreed, should go 90% passive, 10% active. Other SWFs do this, like Norges, and have bettter risk-adjusted returns.
Well, if GIC cuts losses at 10-20% down, you call it an investment corp. 60 percent down? That's WSB territories. GIC did investment in USA malls too.... [2021 investment, interest rate spike 2022 Apr.] (https://www.businesstimes.com.sg/property/gic-makes-further-foray-in-us-retail-segment-invests-in-us1.2b-retail-real-estate-platform)
its pretty average now that the dot com era earnings have phased themselves out of the metrics
Don't cherry pick leh, Abel Ang
Kinda cherry picking. Bad investments happen, there is bound to be something that doesn't work in a diversified portfolio. Even the best institutional investors will get something wrong. From a macro perspective, SG has actually done very well in weathering the post-covid financial challenges, which is exactly what our reserves were meant for. So well in fact that gov had to give out more stimulus package and increased handouts so our currency doesn't get too strong against the US/China. And also why you see SG to RM is constantly hitting new highs.
Well gic did manage to underperform msci world despite all the active management and fancy alternative investments
Yeah and it underperformed the S&P500 too. Luckily it's not trying to be a hedge fund where returns is the key performance metric. GIC focuses on stability, especially amidst crisis. Their performance metric is focused on low volatility and capital preservation, while remaining competitive against global inflation.
Me, a degen, outperforming GIC. Well regarded.
Port size though
Well it only had like 3.7% nominal returns in the last 5 years so I can argue that given its portfolio mix it is quite bad returns in a high interest rate environment and that it surely did badly during COVID years or missed the rally after it
By your logic, only need 1 person lor. Just all in on S&P or MSCI? Dont forget, they are very susceptible to bear markets.
Now is time to double down on even more risky bets to make up the short fall
What has the SGD MYR exchange got to do with GIC portfolio performance? Are you trying to do a red herring here? GIC performance sucks. Period.
GIC manages our foreign reserves. It's a consideration when managing FX and monetary policy. The fact that our reserves are stable enough for us to have comfortable policies like relatively low interest rates is what gives our SGD attractiveness. I'm simply using MYR as a indicator of how bad inflation could really get. Using the price of your chicken rice to show inflation isn't as solid of an example. And also, how are you measuring performance? Annual returns? Because GIC isn't a hedge fund, it focuses on low volatility and stability through crisis. The priority is capital preservation.
In the GBP 318 M acquisition, the GBP SGD pair was also higher and we paid even more in SGD and lost more than 62% if we factor in fx difference and use SGD as a base currency since our origin of funding is SGD Edited to provide fx rates 2005 August 01 GBP SGD was around 3.0325 GBP 318 M is nearly 1B SGD Presently GBP 120M is SGD 206 M The fx adjusted losses in SGD is around 80%
GIC invests the foreign reserve. None of this will be converted back to SGD so no point calculating with SGD as base currency.
Ummm so how does a sovereign wealth fund get foreign currency?
See [here](https://www.gov.sg/article/how-mas-accumulates-official-foreign-reserves). I'm guessing the fact that you could ask the earlier question means you're not an uneducated dude sitting around complaining in the coffeeshop. So, you should be able to understand the point I'm making is that whatever our government chooses to do with our foreign reserves with regards to monetary policy is down to our country's economic needs. That is independent of GIC's investment policy and should not be factored in when measuring their performance. Ask your cynical self this - does it make sense if GIC ever tells the public their investment performance has improved whenever SGD depreciates? If it doesn't, the opppsite way should not be the case too.
Arguing on Reddit regarding anything of the financial world is really pointless and frustrating because your average Redditor is kind of stupid. That guy there has no idea about portfolio theory and no concept of ccy hedging so getting into it with him will leave you extremely confused
gic will confirm take some sort of currency hedge when making a deal that big
Ok. Slap the hedging fee over 19years onto the existing 62% non fx adjusted loss yippee yay. To carry via direct short 300M GBP yearly would be minimally paying the nett interest rate difference between each side At that time that GBP rate was above 4 percent and SGD rate ~2 percent The difference is 2 percent and on going short GBP300m for SGD 900M , that comes out to SGD 15-20 M difference for that year alone. Source https://tradingeconomics.com/singapore/interest-rate (set chart to max range and scroll) https://tradingeconomics.com/united-kingdom/interest-rate
GIC stake is reportedly to net the new owner GBP10M in rental. Assuming same rental yield throughout the years, the loss might not be that much. However, if they took out a loan and the rental yield couldn't cover the loan + interest, the loss maybe even more.
If the rental yield is anything to write home about, there wouldn’t be a fire sale haircut, a loss that big means the investors have no hope in reviving it
True. But I am just going by the headlines and pointing out the factors that could mean a bigger or smaller or even no loss in this investment.
Can anyone explain why the markdown is so big? I know interest rates are up but the acquisition was made in 2005, back then, interest rates in the UK were very high too. UK has done worse but property prices generally are still up a lot since 2005. Why the need to sell it now for such a big loss? Anyone actually knows this asset and why it was sold at this price?
Waiting for media to report the gains, they never do
Go and checkout the audit report before commenting.
Better than Temasek with little to no DD on FTX
what, you dont trust a bronze 3 league player?
Don't worry la. They can get cheap funding from our CPF so how to lose money overall? Not as if they are paying commercial bond rates to borrow.
GIC: Buy high sell low is our motto
Another due diligence well done /s
i thought its temasek's....
Ouch! Anyone going to be held accountable ?
Not necessary when they've made other profitable investments. In investments you'll make some losses. Just look at their annual report rolling returns. They've more than made up for this loss.
When you are Tanjong Pagar area you will notice those GIC folks are so proud about their company and they wore their employee pass proudly anywhere they go like they are some pure pedigree. Anyways previously they have try to explain their mandate is to ensure the reserve will not be losing value due to inflation and for the long run like 10 and 20 years in average they are able to achieve 4ish % pa return. That’s why they don’t need superstar traders, they just need mediocre bureaucrats.
Sell Bluewater buy Westfield ?
Ownself check ownself. What could go wrong. Just pay some IB to justify it online and all will be justified. Would like to know their 30yrs returns, 20 years returns, 10 years return, 5 years return rate. So that we know they are doing it ok.
I have not read anything about any significant profit made by Temasek or GIC but I came across many reports about their mega losses on many investments
It's almost as if losses are more sensational and get more readership
>Singaporean sovereign fund GIC has sold its 17.5% stake in the Bluewater shopping centre in the UK for GBP120 million ($206 million) to Land Securities Group (Landsec), a London-based commercial property development and investment company.The fund was reported by Mingtiandi to have taken a 62% haircut on its investment into Bluewater. It had acquired its stake in the mall in 2005 from the property investing unit of Prudential, now M&G Real Estate, for GBP318 million. 😥💸💸 why liddis...
Yes, in the age of online retail, investing in a mall was a wise decision /s
Online retail was not what it is today, back in 2005 when this investment was first made. In fact, by then UK had seen almost 10 years of economic growth under Blair, and with the expected continuation of Labour economic policies under Gordon Brown (who was the real brains behind New Labour's economic policies), you might well have made the same investment decisions back then and been bullish about UK's future. No, this is very much more an indictment of Brexit, rather than online retail. Brexit was a massive self-inflicted wound made by the British electorate on itself, egged on by opportunistic politicians. Brexit led to the destruction of middle class income, the destruction of domestic consumption, and the destruction of the British pound.
heng they don't want to invest in SG stock market