Tuesday, July 29, 2008

Another quarter; another loss

Having bet the farm already, we knew that Temasek will not abandon their investment in Merrill Lynch.

So I guess we can’t be that surprised that Temasek will buy another $3.4 billion in the company. That is even after Merrill took another $5.7 billion in write-downs. Due to the losses, Merrill announced plans to raise at least $8.5 billion by selling new common shares. Of which Temasek will buy $3.4 billion.

Having invested so much in Merrill, I can understand why Temasek is going in further into the mess. However if Temasek are going in with so much of Singapore’s money, I suggest that take a more hands-on approach in the running of Merrill. Merrill has taken billions of dollars in write-downs in the past few quarters and had sold key holdings to cover those losses.

Merrill may be the No. 3 investment bank on Wall Street, but the problems there had been so bad that they had sold off a 20 percent stake in Bloomberg. You have to wonder just how bad things are there when there had been almost no good news for quite a while now. No matter how big the company is, you cannot have write-downs after write-downs, quarter after quarters.

So if Temasek want to invest more of Singapore’s money in Merrill, go right ahead. But after putting in some much money, Temasek need to put some oversight on the company. These sorts of losses just cannot continue.

9 comments:

Anonymous said...

Dun worry, we have all the elites (and scholars) running Temasek Holdings so Singapore's money is in good hands.

Even if the deal turns bad, it's OK. Nobody in Temasek will get blamed or sacked right? After all, it's Merrill Lynch's fault to continue giving fat paychecks to its CEO, CFO and directors despite its poor performance.

So all's well over here at Temasek. No problem. :)

Ghost said...

It doesn't matter how many scholars Temasek has if they don't have anyone on the Merrill's board to oversee their decisions. From what I read so far, Temasek don't have anyone there as they fear the politicial pressures that will come from it. So it might be a great idea if Temasek put some of those elites and scholars to work.

Tuitionfees said...

Temasek still has plenty of money to punt, sort of averaging out its bets. This strategy will work if Temasek has deep pockets, and the investments are viewed over a period of 30 years. Ho Ching and her bunch of elites either have this incredible vision to see up to 30 years or they have discovered a 'mother of all' economic and financial theory which probably explains the quiet confidence. The worst case scenario is for Ho Ching to write off the losses as personal tuition fees courtesy of indulgent hubby and father-in-law.

Anonymous said...

Oversight? Restraint? Self knowledge or maybe just a good sense to never throw good money after bad?

Maybe the issue looms larger whether there is ANYONE who is actually accountable for such a massive SNAFU at all?

Is ANYONE answerable for losing these MANY billions which could have easily been channeled into the betterment of the hard lives of the citizens of Singapore?

Or is ANYONE not interested in such issues but only more keen on gambling away all the country's money.

Just to remind the "illustrious" and severely overpaid leaders of our fragile nation, you chaps may think that you have done great things for this country but allthat is HISTORY and it counts for nothing when this country is broke and wrecked by your reckless and irresponsible ways. Besides NONE of this actually belongs to you or your party or any of your family, so don't behave like you are the Lords of it all.

It belongs to this nation and you are supposed to be the custodians and not treat it like your grandfather's piggybank. If you forget this simple and crucial fact that the PAP rules simply because WE LET YOU, then maybe you are urging us to change our minds!

I am wearing black on National Day just to show you that I can choose to do so just like how I will choose to vote you out if there is no REAL change. Pass the word!

Anonymous said...

Not just Merril lynch, there are UBS and CITIBANK. ABC Learning 's has lost 90% value since Temasek bought them in 2007. Shin CORP and Capitaland 's Autraland capital raising.

Hojinx is truly a capable woman, really know where to find bad investment to invest. I think really unique to SG.

I am wearing black on NDP. All Sinkies sick of such news please wear black that day to tell the government to F*** Wake up.

Anonymous said...

Our old man talked of a 30 years horizon. Who can know that far and who is left accountable? J.M Keynes said, "In the long term, we are all dead!"

letdown said...

GIC and Temasek were set up to make money not for the peoples' benefit. Both funds are bleeding badly and the transfusion has to come from the people, to ease the bleeding. Where else can the money come from ?
The 30 years horizon is meant for LKY's grandchildren to benefit.

However, if the losses/bleeding continue at the present rate, many poor folks will end up following LKY to his grave.
Good idea to wear black this 9th August, the NDP and state flag is meaningless to people like me. I rather bond with fellow Singaporeans with similar sentiments.

Ghost said...

The big problem I see is that Temasek will own over 10% of Merrill once the deal is approved. Once the deal is done, if things goes badly for Merrill, Temasek will not be able to get themselves out of the mess even if they want to. That to me is the biggest problem as Merrill has shown no sign that things will get better there

Anonymous said...

Its amazing that GIC and Temasek can bleed so much money without being accountable to anyone. Simply amazing.