Is the mainstream media trying to sensationalize Temasek’s performance?

When Temasek releases its latest “Summary Reporting”, I find the various reports from our mainstream media very confusing. With headline that screams “Temasek’s net portfolio value hits record high for third year running”, one would expect its returns on investment to be doing well too.

Interestingly, its latest Total Shareholder Return or TSR for the same period fell to 1.49%, quantified by the statement that this is “on the back of market volatility”. Does this make any sense?

Understanding Asset Valuation

Most Singaporeans owned a 99-year lease on their new HDB flat. Its value goes up and down. When all is well, a 5-room can be valued at S$600,000 or higher but when the market is down, it can be valued at much less. What we can be sure is the fact that valuation is relative to market condition and the prevailing policy.

For families who buy to live in their asset, valuation has very little material impact. From an investment perspective however, valuation and operating costs matter. Professional investors primarily invest to make a profit, not to be sentimental or to live or enjoy their asset. All assets and investment are regularly updated by fresh independent valuation and this impact the book value of their overall investment. Even equity investment is marked to market and nothing is left to mere assumption unless it is a family-owned investment company.

Validating Asset Valuation

For organisations, the senior management periodically present their financial performance to their shareholders, substantiated by hard data. All assumptions are also properly explained, documented and validated.

In good year, most shareholders tend to be more forgiving. But in bad years, they will call in their independent accountants and financial controllers to tear apart these data to validate why their returns have fallen and if they had been taken for a ride by the senior management. Senior management have to properly account for their past performance and also assure the shareholders that they have a grounded plan to beat the difficult market condition during challenging years. “I trust my best” is not an option in the boardroom.

For average Singaporeans like us, we do not need those accounting skills to make sense of our everyday investment in housing, car or equity. If the valuation is high, it is because the asset is yielding a good return. With good return, the improved cash flow increases the asset value. If the rental of HDB is high, the value of our HDB will also be high. Returns and valuation complement one another. If return is low or weak, so will the valuation. There is a correlation between return and value of investment.

Here lies the unexplained discrepancy in the case of Temasek’s latest statements. If its shareholder return is taking a hit, year on year, its valuation should also be affected. I am clueless why no journalist from CNA, ST or BT had not asked for more clarification to this discrepancy.

Logic Sequencing

Look at it this way. If my house, an investment, cannot generate a good rental income, which is a “return” on my investment, then logic dictates that should I seek an appraisal from any valuation agency, I would naturally get a lower valuation. On hindsight, I can only blame myself for not seeking better investment advice or engage the service of real professionals.

If the market condition gets worse and my house remain vacant and needs more enhancement to make it rentable, then my investment will be further weaken by these additional operating costs or capital expenditure. By now, I do not need to engage a valuation agency to be telling me that my valuation will now be much worse.

Valuation that is priced to market in such an instance is most depressing. Logically, why would I want such validation and risks being mocked by others for making a bad investment? Better to be explicit in narrating that my investment is for the long term as market will self-correct at some point. No one can fault such a motherhood statement. In the interim, I can take consolation from my old valuation appraisal report, which is higher, and wait for the light at the end of the tunnel.

If Temasek’s investment has been subjected to challenging investment environment these past years, how can their portfolio value remains high when their return has taken a hit year on year?

As detail financial information on Temasek is privileged, we can only rely on their “Summary Reporting” and take them at their face value. After all, will the senior management at Temasek dares lie to Singaporeans?

As there is indeed a discrepancy that just do not make sense to average Singaporean like myself, I hope our journalists, and the “experts” that they had rely upon, can be more constructive in enlightening us. It is always good to be learning new trick and insight.

Going Forward
As Temasek is active in our bond market, why aren’t journalists conducting a more insightful review as to whether the fall in its TSR to 1.49% will have any material impact on our bond market, and should Singaporeans who are holding these bonds be concern? As the guaranteed return on its bonds are higher than 1.49%, what is the implication for Temasek?

Since our Sing-dollar has appreciated much against the Chinese yuan and Indian rupee over these past years, it means that Temasek can buy more for less. If so, there should be a positive impact on the valuation of its fresh investment in China and India at face value. As such, it will be good to know just how much of the 1.62% increase in its portfolio value, from S$308 billion to S$313 billion, is attributed to the currency advantage of our Sing-dollar.

Over time, the reverse could be true. Can Temasek still stay positive on its TSR and portfolio value by this time, next year? After all, the decline of its TSR from 12.19% to 1.49% is quite substantial. Can more bond issuing be a solution or will it become its Achilles heel since it cannot continue to pay out more than its earning?

The Hard Truth is looking like Temasek is facing some very serious challenges. As the trade tension between the US and China is likely to be protracted, should Singaporeans be concern?

I hope the journalists from our mainstream media will do more justice with such news instead of trying to sensationalize them with confusing headlines or make sweeping statements that makes no sense. If they are not asking logical questions of Temasek, who can Singaporeans rely upon?

Singapore deserves better.


Joseph Nathan




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11 Responses to “Is the mainstream media trying to sensationalize Temasek’s performance?”

  • I'm Halimah jiak liao bee:

    MSM has been the propaganda broadshit of the PAPIGS, will they dare to say or report anything negative about their pay masters ???
    Also remember that Loony’s wife is sitting there, and has seen to be abusing her position wrt ordering civil servant to her beck and call.
    Shit Times reporters – will they risk their rice bowl to write anything more critical ?

    GD Star Rating
  • Return My CPF:

    When CPF is locked up and reserves a state secret, then common sense will tell that all isn’t well, hopefully there is still something left, otherwise you think the stooge parrots will pass up this chance to trumpet and make a huge Wayang? Every meagre good news is blown big.

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  • Reserves In Trouble:

    The former CEO of chartered semicon who led the company that grew the share price from high of twenty dollars to ten cents just before it was sold.

    GD Star Rating
  • Ramjeow Lingus:

    The people have social justice meh?
    Or just a selfish city you die your own parsah?

    GD Star Rating
  • TruBlu:

    the TH TALENTS are basically not performing well.

    it would be even better if TH can segregate DOMESTIC INCOME portion from INCOME EARNED OVERSEAS?

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  • dont kpkb just vto:

    Nothing makes sense anymore in our country.

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  • ST is pap states times???:

    each human race has their own specificity.

    probably due to genes, one race tend to be alcoholic, one race obese, one race lying, one race lies even more.

    also due to S$m lucre, some races transgress beyond what genes can tell. such as putting own spouse in lucrative S$m no need to account positions.

    even so, some races have backbone. some races don’t.

    at the end of the day, lky the lying liar is now facing his maker for all the abusive lies he made for political advantage. very soon his clown, as revealed by Mr Lee Hsien Yang and Dr Lee Wei Ling for abuse of power, shall face the same maker like his lying liar papa lky. so also all hi kakis such as ah neh cj, ah neh states times editor, ah neh bala and such.

    no escape. genes or S$m lucre. lying is a punishable sin. lying for jailing fellow humans for long long without charge is double punishable sin. abuse of power via suing powerless citizens is triply punishable sin.

    no escape. for sure.

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  • Harder Truths:

    You mean the Ministry of Propaganda?

    But…but…would they do something like that?

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  • Ramarau Perumal:

    Mr Nathan,

    You must understand,the Zaibatsu,the Cheabol and The Kongsi concepts, while talking about FTW, Show me the money, American logic.
    It is hard to float a sinking boat.

    GD Star Rating
  • Rabble-rouser:

    OBFUSCATION – the action of making something obscure, unclear, or unintelligible.
    Long-time TRE commenter oxygen had made this simple observation:
    S’pore govt & their extensions (GLCs, SWFs)
    (1) don’t possess good business acumen in building large scale businesses competing on a global scale eg. Chartered SemiCon, NOL, Et al;
    (2) don’t possess great trading instincts with excellent P&L outcomes of financial & physical assets in the global markets.
    If they aren’t even good in these 2 areas, how do they reward themselves with consistently poor performance? How to do that in the presence of clarity? You can’t!
    S’pore journalists & their mass media channels employers aren’t even worth a cent when in comes to doing a Public Service of critical analyses, of informing the public? NOBLE, a former STI component stock was undone by Iceberg Research, an overseas short seller whom deeply analysed their Financial Accounts & found troubling issues. The rest as they say were history lessons! HYFLUX was another market darling whom issued enormous bond proxy equity instruments paying an unheard 6% pa return when market yields were much, much lower. 34,000 retail investors plough their life savings into HYFLUX. Again the rest were history lessons. But people failed to ask questions as to how HYFLUX were allowed to borrow so much from the public without much scrutiny, without any media investigative effort for the greater good?
    If one looks at S’pore’s media institutions today, you can see that they failing badly in the domestic marketplace! Very few people read the Print Media today. Only housewives, retirees & the poor watch the free-to-air MediaCorp tv programming. Why? The obvious answer is the rise of the Internet & various technologies like Broadband, Wifi & (now 5G) Mobile Technologies which made accessibility possible & alternatives a buffet spread.
    Even for National Strategic Planning, PAP had failed big-time! S’pore educators sat on their hands for over 2 decades fiddling & retaining Meritocracy Policy, Elitist Schools while China focused on STEM (Science, Technology, Engineering, Mathematics) over a broad base for the same period. In the process, they became masters of their own destiny – & continued updating the country’s manufacturing base by rapidly developing 10 high-tech industries, including electric cars and other new-energy vehicles, next-generation information technology and telecommunications, as well as advanced robotics and artificial intelligence, aerospace engineering, high-end rail infrastructure, and high-tech maritime engineering.

    - Cont’d -

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  • Rabble-rouser:

    - Cont’d -
    Even manufacturing powerhouse, Germany intends to fuse cyber-physical systems, the Internet of things, cloud computing, and cognitive computing with the aim of increasing manufacturing productivity by up to 50 percent, while curtailing resources (raw materials consumption; energy, water inputs) required by half.
    When one reads of those dynamic economies’ long-term plans of invigorating & strengthening their economies – you feel a sense of dread & deflating expectations when the PAP’s sole objective is to boost population numbers to 10 million by 2030. This is nothing but a bankrupt plan of no thinking nor effort required, no long pathways just simple shortcuts, never mind the side effects so long as the political aristocrats maintain their entitlement, privileges & benefits.
    Can you see & make out the sense of it all? If not, good luck to you!

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