Sovereign funds, mostly from Asia, have made substantial losses from investment in U.S., Swiss and U.K. since the start of the subprime crisis. There are several notable examples.
First, the Government of Singapore Investment Corp.’s assets have fallen about 25 percent from their peak last year. Moreover, Temasek Holdings Pte, the island’s state-owned investment company, had a $58 billion decline in its overall portfolio in the eight months ended November.
The value of Temasek’s assets fell 31 percent to S$127 billion in the eight months to Nov. 30 as the credit crisis drove down the value of stakes in Merrill Lynch & Co., Barclays Plc and Standard Chartered Plc.
The $88 billion Temasek, the owner of five of Singapore’s 10 largest companies by market value, is expanding in Asia and other emerging markets while reducing exposure to developed economies. Temasek was founded in 1974 to foster development of the island’s banks, airlines and ports. It owns shares of Singapore’s biggest bank and its largest telephone company.
Second, the Monetary Authority of Singapore posted its first loss ever as the global financial crisis eroded the value of its investments.
The central bank had a net loss of S$9.2 billion ($6.3 billion) in the year ended March 31, the equivalent of about 3.5 percent of the authority’s total assets on average. The bank posted profits of S$1.22 billion to S$7.44 billion in each of the previous five years.
Obviously, the unprecedented global financial crisis had a severe impact on financial markets worldwide and many asset classes suffered steep declines, which affected the valuation of the Authority’s foreign assets.
Third, Hong Kong’s Exchange Fund Investment Ltd., lost HK$33.5 billion ($4.3 billion) in the three months ended March 31, its biggest first-quarter loss since at least 2001. A decline in the value of equities contributed 62 percent to the fund’s loss in the first three months of 2009.
Fourth, the California Public Employees' Retirement System or Calpers saw the market value of its assets plunged 23.4 percent for the year ended June 30, marking the most severe annual decline the nation's largest public pension fund has ever reported.
Assets fell to $180.9 billion on June 30 from $237.1 billion a year earlier. This result is not a surprise given the collapse of markets across the globe. The fund's assets dipped as low as $160 billion in March of this year.
CalPERS has sued three credit rating agencies, blaming Moody's Investors Service, Standard & Poor's and Fitch Ratings for luring the fund into more than $1 billion in bad investments.
Moreover, the California State Teachers' Retirement System, or Calstrs, the second-largest U.S. public pension fund posted a 25.0 percent loss in the fiscal year ended June 30. Its assets is now totaled $118.8 billion for the fiscal year.
Moody's Investors Service recently said that the top AAA credit ratings of California's two main public pension funds— Calpers and Calstrs— were placed on review for a possible downgrade.
It is fortunate that Thailand did not set up a sovereign wealth fund and made investment before this global crisis. The only fund that comes close to it is the Government Pension Fund (GPF) which suffered some losses and now under close public scrutiny. We can clearly see from the aforementioned examples that our GPF is not alone.
Chodechai Suwanaporn [email protected]
Source: Fiscal Policy Office / www.fpo.go.th