Random Thoughts : Temasek, Olam and Watsons – When It is So Dumb, It Must Be Smart

There is a lesson to be learnt here and it has nothing to do with March madness.

Temasek has been dominating the headlines in the past 2 weeks and getting the attention of taxi drivers and hawkers on the stakes in Olam and now, Watsons just because they are household names which is pity because none of us are availed to information on their private equity holdings which comprise 27% of their portfolio.

Temasek Said Near $1 Billion Sale of Private Equity Fund Stakes
http://www.businessweek.com/news/2014-03-21/temasek-said-near-1-billion-sale-of-private-equity-fund-stakes

My Wealthy Friend who does not really have much to complain about in life, really, even commented that he learnt his mistake from Li Ka Shing and never saw daylight in his Hutchison Port IPO investment (HPHT SP) which he finally cut at a loss of 15%.

HUTCHISON PORT STOCK PRICE

We mentioned Li Ka Shing several times last year.

1. Selling his mall to Fortune Reit  https://tradehaven.net/market/cashing-out-time/
2. Taking his public utilities business public https://tradehaven.net/market/sellers-largesse-continues-with-li-ka-shing/
3. When he failed to sell his Park and Shop chain, why not bundle it up with Watsons ? https://tradehaven.net/market/cashing-up-with-li-ka-shing/

We know he is not feeling very indulgent on Hong Kong these days, comparing the general populace to a “spoilt child” and warning on the dangers of populism which could potentially be the path Singapore is heading towards with unprecedented handouts to the citizens. http://www.scmp.com/news/hong-kong/article/1442186/li-ka-shing-warns-hong-kong-spoilt-child-set-dangerous-path

Well, I say we don’t have a problem until the day they start giving out free cars and I don’t get one.

And I am not here to comment on Temasek because my little pea brain is simply unable to quantify political and other motivations for investment decisions (but we can be sure Watsons will only list on SGX now), only to vouch that I have not bought anything from Watsons in a long time since I discovered the Qoo10, Aliexpress and iHerb websites. Besides we are talking about such big amounts of money, there is very little you can buy out there with 215 billion without making too many waves.

In addition, I am not a terribly far sighted person. For instance, in their ICBC stake last year, I was looking at the small picture (first red arrow purchase date and story link https://tradehaven.net/views_commentaries/why-temasek-why/

ICBC CH CHART 1ICBC 1 YEAR PRICE CHART

The bigger picture is this and it doesn’t look too bad (unless you superimpose the S&P 500 chart on top of it.. which I won’t).

ICBC CH CHART 2ICBC Price Chart Since IPO

Fodder for thought – who owns Singapore’s reserves ? I am not referring to the CPF, but rather, the annual budgetary surpluses we have accumulated over the past 49 years. I was wondering who owns Singapore’s reserves, just like who owns the oil reserves of Norway ? For Saudi, I guess the King does, but what about the rest of them ? China and gang ?

Got stuck on my diagram and so I gave up.

temasek and cpf

Well, I hope the reserves do not belong to the people because some people are sure to bitch that the new citizens do not deserve it. So I thought maybe we can sell shares ? Citizenship shares ? Since new citizens will have a share of the national reserves, they have to pay a fair value for them ?

Shouldn’t countries with reserves be worth more than countries that don’t ? Or countries that distribute their annual surpluses have a fair price too ?

Back to Temasek.

When it feels so dumb to everyone, I conclude, it must then be smart.

Between Olam and Watson’s and Singapore Food Industries, I say we can get a supermarket chain going. Olam could go into meat, poultry and fish too ! SGX could create a FISH futures for white fish, tilapia and fish oil ? And POULTRY and EGG futures ?

Enough for laughs.

My initial thought was that Temasek is getting out of SGD because Olam and Watsons are both USD and HKD based stocks. Then again, they would have been much more profitable in SGD dollars terms but for the exchange rate losses for all their non SGD investments dampened by the SGD’s strength.

It is because next month is … APRIL. And April is Singapore’s Monetary Policy Review month which has not been announced yet but I would expect it around the time of the GDP release which is between 10-14 April.to be continued…. in My USDSGD Monetary Policy Statement Piece – Forward Guidance Please