The Abysmal Singapore, Temasek, and GIC Balance Sheet

Last Thursday, we analyzed the Singapore balance sheets for 2009 and 2011 arriving at an implied valuation for GIC.

What really causes concern is that despite claims Temasek grew at 22% annually, Singapore Inc. managed only $30 billion SGD of net asset growth. The growth in assets on the Singapore, Inc. balance sheet was mostly offset by a rapid growth in debt. In other words, Singapore, Inc. was borrowing heavily to buy assets.

When you take a closer look at the the balance sheet things get even worse. Singapore Inc., Temasek, and GIC’s performance when placed against other broader indexes are quite poor. For instance, while the S&P 500 and Strait Times Index grew at 25% and 29% annually, Temasek grew at a less impressive 22%. However, that is only part of the story. Let’s look at this in a table to make things easier.

To make matters worse, total Singapore asset growth was a paltry 7% annually. However, if we strip out the growth in public debt during this time period, the picture begins to look down right worrying. In a period when global stock markets were booming at 25-30% annually, net asset growth at GIC and Temasek grew by a total (TOTAL) of 4.2%!!

Let me simplify. If you invested in $100 in the S&P 500 or the Strait Times Index on April 1, 2009, on April 1, 2011 you would have either $156 or $165. However, if you invested that same $100 in Singapore, Inc., you would have between $104 and $116 depending on which measure you prefer to use.

In an absolute best case scenario, Singapore, Inc. is not even coming close to matching market returns or even covering its cost of capital from borrowing CPF funds.

How you invest your money is your business. However, how your government invests your money is your business. We can only hope that the government of Singapore will be completely honest with its citizens and that people will demand answers for how their hundreds of billions of dollars are being invested.