For the first time the Government of Singapore Investment Corporation (GIC) has announced how its massive foreign investments have performed. It has revealed that a return of 9.5 per cent in US dollars was made each year for the past 25 years. I don't know how much that equates to but I'm pretty sure its a lot considering its assets are worth more than 100 billion US dollars.If indeed they are having fantastic returns so why didn't they make this public earlier?
Is the Lees trying to put up a wayang just to prove Chees wrong over the allegation in New Democrat?
Yeah right, he's so transparent he's almost invisible!
ReplyDeleteWishful thinking.
ReplyDeleteOnly a pig will belive his words.
ReplyDeleteConsidering how quick they are at delivering self-praise, it really is a wonder indeed.
ReplyDeleteAssuming that these unauditable numbers are real, it is no big deal.
ReplyDeleteIt's like Nick Leeson doubling his pot to recover losses. Based on the law of probabilities, you have turn a profit eventually, unless you were an idiot with seriously bad luck in a bad market... now what are the odds of this happening all at the same?
There are 2 reasons why Nick Leeson failed where GIC prevailed.
1. Barings was subject to audit controls. GIC is not. This is easy when you can hide your losses (in the name protecting your foreign reserves) for years on end and only announce your results when profitable. Try doing that in a publicly listed corporation and you'll be convicted and jailed for defrauding shareholders, Enron style.
2. To put things in perspective, Barings had $900 million in capital and defaulted on Nick Leeson's $1 billion of unauthorised trading losses. GIC currently has $100 billion in assets. Even at inception in 1981, GIC started out with $6 billion. This coupled with easy access to funding practically guarantees unlimited resources.
Let me explain further on why there is unlimited access to funding. In the financial markets, there are 2 common ways to raise funds, ie issuing debt (eg bonds) or equity. As mentioned by our bold and fearless leader, MM Lee, "The CPF invests members' savings only in absolutely risk-free Singapore government bonds". When the Singapore government issues bonds, many banks in Singapore are forced to subscribe to the bonds. If the government can coerce the banks into this form of "national service", what do you think the CPF is made to do? This is what I mean by cheap funding.
When you combine 1 and 2, it is an almost guaranteed formula for success, it's no rocket science.
From CNA:-
ReplyDeleteMM Lee said that the GIC invests the government's reserves abroad in assets which carry higher risks like equities, bonds, real estate.
Therefore these are expected to earn higher returns on average over the long term.
The returns are not related to CPF investments.
"The CPF invests members' savings only in absolutely risk-free Singapore government bonds," MM Lee said.
"CPF members are paid market-related interest rates based on the 12-month fixed deposit rates and the savings account interest rates of the major Singapore banks, subject to a floor," he said.
"CPF members who are willing to accept higher risks for higher returns have many channels to do so on their own through the CPFIS scheme," he added.
If you were a fund manager independent of any vested interests, managing the CPF funds. Wouldn't you want the best return on your investment?
There are many principal protected investments in the financial markets which return better yields than Singapore government bonds with equal or better credit ratings than the Singapore government. Given that they are now many instruments to fully hedge foreign currency risk, isn't it in the best interests of the CPF members that these investment opportunities be exploited? Instead, CPF funds are invested in Singapore government bonds rather than instruments that yield the best return on investment. Given that both the GIC and CPF are controlled by the Singapore government, it is easy for GIC to issue a bond paying a low coupon which the CPF is forced to buy even if there are no takers in the financial markets. Anyone who says there is no conflict of interest must be lying through their teeth.
that jerk!
ReplyDeleteSo basically what you have here is LKY clarifying that GIC's earnings should not be linked to CPF interest rates. The justification being that it is a separate entity funded by Singapore government bonds, ie GIC does not use CPF money as trading capital. But all he has admitted to is that money is just being moved from the left pocket to the right pocket under the disguise of an administrative overhead resulting from creative accounting meant to misled the public.
ReplyDeleteThe result is then not only are Singaporeans misled into accepting lower returns. They are also forced to pay for the administrative overhead resulting from the pointless exercise of issuing the bonds.
i'm sure the people in charge of GIC and CPF both report to the same ultimate boss... it's just really a matter of moving around the money between different departments through what seems to be on the surface a transaction conducted at arms length between "separate entities".
ReplyDeleteI wouldn't say that the banks are forced to subscribe to Singapore government bonds. It's more like the way a company cross sells a product. Only the case of Singapore government, it's more like "subscribe to these bonds and we will maintain your full banking licence" or in the case of foreign banks "we will ensure that your Qualifying Full Bank (QFB) status remains active". Either way the CPF money is still being abused, ie to provide cheap funding for generating trading profits for GIC which the CPF member will never get to see.
ReplyDeleteThese of course help generate the huge surpluses which help pay for obscene minister salaries. Here, we have now come back full circle to the same old rotten issues.
is he the independent auditor ordained by God ? I do not buy the crap!
ReplyDeletePlease believe Lee Kuan Yew, the perpetual super clean man. He once said that he is the poorest leader in this world.
ReplyDeleteSure... don't buy the crap. Just carry on living in your pathetic little world with rose tinted glasses while your CPF funds are being bled away by the very same administration you have sanctioned with your landslide mandate. But it is most certainly a free world of course, everyone is entitled to their own beliefs or in some instances, naivete.
ReplyDeleteAnonymous above speaks the truth.
ReplyDeleteA super clean man is candidate for sainthood.Does LKY qualify. Let's poll it.
At the risk of sounding cliched, absolute power corrupts absolutely.
ReplyDeleteContrary to the god-like status that the Singapore mainstream media has elevated him to, Lee Kuan Yew is just a normal guy who manifests all the regular symptoms of any drug addict. It's just that his poison of choice is power.
Take a look at history and you will see. It all started when the elder Lee was leading Singapore in a fight for independence from the British (do note the irony). Lee is a conniving guy, he knew he lacked the appeal and charisma of Lim Chin Siong who with his associates was at the time detained by the British without trial under the Preservation of Public Security Ordinance (PPSO). Intending to make use of him to incite the locals against the British, he quietly visited Lim and his comrades in prison and made them sign an oath of allegiance to him upon their release. They did. In return, they wanted Lee to sign a statement promising to free all political prisoners if he won the elections. He did not.
In the run up to the elections, a Singapore observer, Thomas Bellow described how "Lee used information the Labour Front to which only the Council of Ministers were supposedly privy" to enable the PAP to suddenly "seek an absolute majority of the seats in the May 1959 elections". After the PAP's resounding victory, Lee never released many of Lim's colleagues who freedom he campaigned for before the elections. Lim was initally released. But Lee instituted what is now known as the Internal Security Act. Lim was arrested and thrown back into prison.
As history speaks for itself, it all started with his abuse of the legal system, from interpreting the law (while working for the British), policy making and law enforcement. Lee's addiction to power and obsessive need for control has since spread like a disease to many other areas, the mainstream media, judicial system and as the lack of transparency in the GIC, CPF and previously Lee and his family's dealings in dubious property transactions in the HPL case clearly indicates, the finance industry as well. All these deparments, ministries or statutory boards which are usually independent in a normal and free democratic system, are highly regulated and controlled by a select few endorsed by Lee, his family and his cronies, run smoothly together to ensure that power remains within a select few and that they are not subject to public scrutiny for their misdeeds.
Lee as you can see is no different from a crack addict. The only difference is that given his position in power, achieving his personal objectives almost always results in multitudes of abused Singaporeans being less well off, analogous to a drug trafficker whose crimes are of course punishable by death. Oh the irony! Nguyen must be turning in his grave!
Before you buy the "crap", you have to understand it. So please do yourself a favour and first educate yourself. Knowledge is power and this is something that the PAP highly regulates and influences with it's control of the local media. Don't you feel that you have moral obligation to help prevent others from being exploited? Isn't the case a lot more resounding if the one being exploited is yourself and your family?
ReplyDelete