The political intrigue in today's story goes like this: Earlier this year, Ho Ching declared that she would step down as boss of Temasek after five years at the helm. Many attributed this decision to the SWF losing massively due to its large holdings of financial stocks and the attendant public outcry. Yankee Chip Goodyear, last the CEO of Aussie mining giant BHP Billiton, was set to replace her. For one reason or another, though, things have not panned out. News reports typically discuss the abrasive "ugly American" management style of Goodyear clashing with the public service and bureaucratic orientation of Temasek as a reason for him not assuming his intended post.
So, despite hemorrhaging billions and billions of dollars due to "investing" in Merrill Lynch and other financials, Ho Ching is now set to remain while Chip Goodyear has been told to hit the road. From Reuters:
Singapore's state investor Temasek said its portfolio slid by at least $40 billion, or more than a fifth, in the year to March but it will stick with banks and sees opportunities in food and energy. The fund saw potential in Asia and Latin America and was comfortable with financial services as its core portfolio holding, despite being hurt by the market meltdown last year after its high profile investments in Western banks, CEO Ho Ching said on Wednesday. 'At this point, we are still comfortable with the financial sector a s a sector that reflects the key economies we are interested in,' she said at a lunch talk organised by the Institute of Policy Studies think-tank.The question I would like to ask is this: would any executive in the West have survived virtually unscathed after losing a cool $40 billion? It's true enough that Singapore is filthy rich, but for how long if it just lets these things slide? Goodyear might not have been the most amiable character, but he surely had better strategic ideas than holding trashy American financials.
She acknowledged, however, that the increased regulation of the financial sector may result in the rate of returns falling. 'In terms of sectors specifically, we are agnostic, we don't have a sectoral target,' she said, adding the fund would look at food and energy but without giving further details.
These were the first public comments by Ms Ho, also the wife of Prime Minister Lee Hsien Loong, after Temasek said last week that Charles 'Chip' Goodyear will not become CEO due to differences over strategy. With 40 per cent of its holdings in financials, Temasek's portfolio lost nearly a third in the eight months to November, sparking unprecedented criticism in Singapore about its strategy. Ms Ho did not give the exact portfolio level as of March 2009...
Temasek had S$185 billion in assets as of end-March 2008, which fell to S$127 billion as of November 2008. Mr Goodyear was widely expected to trim Temasek's financial holdings and move aggressively into commodities and energy and into emerging market infrastructure and consumer retail sectors, analysts and bankers have said. Ms Ho said Temasek would continue to look at internal and external candidates for her replacement. Mr Goodyear's departure came less than six months after he was named by Temasek as the sovereign wealth fund's first foreign CEO. He would have replaced Ms Ho on Oct 1.