.jpg)
ion still in the makingIt is reported in various papers today that "Temasek Holdings has cut its losses on Bank of America (BOA). The Singapore investment agency has sold its 3 per cent stake in the bank, resulting in a loss of about US$3 billion as it renews its focus back home and on the region."
Question - Why the need for Temasek to sell down and realised a loss of such a magnitude?
First thing first, you make decision on the merits of individual investment. When you are not short of funds, you don't have to sell before you buy again. You cannot justify the sale and subsequent loss of that magnitude by telling the world that you are "tweaking your portfolio and refocusing back to the region". This is pure crap.
Secondly, it is obvious that the information available to Temasek's management, ie. prior to its decision to systematicly selldown all its Bank of America's stake in Q1 2009, have painted a pessismistic picture of US economy and its banking sector in near term and thus prompted their decision to sell and not wait. They obviously do not believe that BOA's share price would not be any better to mitigate the loss. Recovery is obviously not in sight.
Didn't Temasek's management get any indication from its sources that the global equity markets would run from early May? Or is the current bull run in May an illusion? Or Temasek may be telling us something we don't know or we refuse to believe given the current bull run.
Has Temasek made another "boo boo" by selling too early? Or Temasek may have taken a wise, informed, preventive action to avoid greater future losses?
Only time will tell.
2 comments:
Let me try to summarise some key points made by 4 persons to ST Forum.
1. Denis Distant - BOA's share prices fluctuated over a wide range. So please explain.
2. Ignatius Low - He too asked for more transparency on the divestment.
3. Johnny Heng - The lone ranger said call for transparency should be reasonable.
4. Png Eng Huat
- Temasek sold perhaps they did not get what they got in for. Bought into Merril Lynch and got BOA.
- Why stick to a sinking ship of ABC Learning Centres but choosed to abandon a US-government-backed entity in BOA?
Today, Myrna Thomas, Managing director Corporate Affairs
Temasek Holdings, attempted to explain the sale of BOA.
She started with "Temasek invests with the objective of delivering sustainable returns over the long term.... blah blah blah..."
The main reason she used is "Our investment thesis had changed from Merrill's specific businesses to the more diversified BoA linkage to the broader US economy...."
Investment thesis has changed? Huh??????
Then she finished off her "explanation" with "While we do our best to mitigate risks, blah blah blah..."
Btw, has she explained?
Post a Comment