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Thursday, 5 March 2009

GIC assets down 25%

THE investment portfolio managed by the Government of Singapore Investment Corporation (GIC) has lost about 25 per cent of its value from its peak last year, Minister Mentor and GIC chairman Lee Kuan Yew revealed in a Reuters interview yesterday.

Putting a figure to GIC's losses for the first time since the financial crisis started, MM Lee also acknowledged that GIC had bought shares in global banks UBS and Citigroup 'too early'.

'We expected the market to go down in equities,' he elaborated at the Thomson Reuters Newsmaker Event after his interview. GIC thus reduced equity holdings by 15 per cent to 16 per cent, making it cash-rich and able to pick up stocks like UBS and Citi when the market fell.

'But we went in too early,' he said. 'That's part of the ride. We can tough it out for 10 years, 15 years.'

Last month, the Government disclosed that Temasek Holdings saw net portfolio value drop 31 per cent between March 31 and Nov 30 last year. Senior Minister of State for Finance Lim Hwee Hua said the Government assesses the performances of GIC and Temasek on an 'overall basis' rather than on individual investments.

MM Lee said in the Reuters interview that if GIC had not gone into banks and had held on to its equity investments instead, these would also have lost value.

Just last week, GIC converted its US$6.88 billion (S$10.6 billion) of preferred shares in Citigroup into common stock at US$3.25 per share. This pared its paper losses on the investment from 80 per cent to 24 per cent, reports said.

GIC also invested 11 billion Swiss francs (S$14 billion) in UBS in December 2007, a stake that was diluted when the Swiss government pumped emergency cash into the faltering bank last October.

Still, MM Lee said GIC's performance was 'slightly better than Harvard'. Harvard University's endowment fund likely fell about 30 per cent last year, while Yale University's endowments have seen double-digit declines.

GIC has 'well over US$100 billion' in investments over several asset classes in more than 40 countries, according to its first-ever annual report released in September last year. The exact value of GIC's portfolio is not publicly known.

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