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https://asia.nikkei.com/Business/Markets/Singapore-s-GIC-and-Temasek-fear-prolonged-COVID-impact?utm_campaign=RN%20Subscriber%20newsletter&utm_medium=daily%20newsletter&utm_source=NAR%20Newsletter&utm_content=article%20link&del_type=1&pub_date=20200728190000&seq_num=19&si=%%user_id%% Singapore's GIC and Temasek fear prolonged COVID impact Sovereign funds counter worst perfomance in a decade with risk-resilient portfolios GIC and Temasek reported the lowest performance in years in their latest update. (Source photos by Reuters) KENTARO IWAMOTO, Nikkei staff writerJuly 28, 2020 15:33 JST SINGAPORE -- Singapore government funds GIC and Temasek Holdings, both among the world's biggest institutional investors, have become more cautious about the prolonged impact of the COVID-19 pandemic and its effect on the investment landscape. Both funds have reported their lowest performance in years, and say they will build more risk-resilient portfolios while seeking new opportunities. GIC, which does not release one-year performance figures, reported on Tuesday an annualized 20-year real rate of return of 2.7% -- down from 3.4% the previous year -- marking the worst showing for that metric since 2009 during the global financial crisis. The company largely blamed the decline on the tech-bubble return in the late 1990s dropping out of the 20-year window, rather than the recent drawdown of global markets. Though GIC does not disclose its total asset size, its portfolio reveals a defensive stance taken in the last fiscal year. It increased nominal bonds and cash to 44% of its asset mix as of March 31 from 39% a year ago, while reducing emerging market equity from 18% to 15% during the same period. "GIC had become increasingly concerned with high valuations, weakening economic cycle fundamentals, limited room for policy flexibility and geopolitical tensions, and had positioned the portfolio defensively," said CEO Lim Chow Kiat in a statement, noting that the defensive stance helped its portfolio withstand market turmoil stemming from the pandemic. "The global health and economic outlook remains challenging. In this environment, GIC continues to proactively seek opportunities that will generate good long-term risk-adjusted returns, as well as ensure that the total GIC portfolio remains resilient to uncertain outcomes," he added. In its performance report released on the same day, GIC noted that the pandemic "accelerated several shifts that could shape the global investment landscape going forward." Among these are U.S.-China tensions, describing them as "a significant headwind." The company noted that "There could be further restrictions related to technology, with the U.S. already excluding Chinese firms from its Information and Communications Technology supply chains, and limiting China's access to U.S.-origin technology and materials." GIC has investments in over 40 countries, according to the company, with the U.S. accounting for 34%, Asia 32% and the U.K. and EU zone 19%. The company said that Asia will outperform over the long term due to underlying trends such as urbanization and a burgeoning middle-class. Another change in the investment landscape GIC noted is that industry consolidation will increase amid the prolonged crisis, as investors are showing "strong preference for companies with more resilient balance sheets and business models." Meanwhile, Temasek revealed in its preliminary performance report last week that the annual return for the year ended March 31 was minus 2.3%, down from the previous year's 1.49% and the lowest since 2016. The net portfolio value declined about 2% to 306 billion Singapore dollars ($220 billion). "The market rebound we've seen in recent weeks should be viewed with caution," Temasek International CEO Dilhan Pillay said in a video message. Pillay also commented in a written statement that "Rising geopolitical and trade tensions, as a result of increasing nationalism and protectionism, will create more uncertainties for long-term investors and asset owners. These uncertainties are now exacerbated by the immediate, as well as longer-term, impact of COVID-19." Noting that some investors would shift to other areas like digitalization and health care, both of which are seeing rising demand as the pandemic has changed work styles, Pillay said his company will "aim to build a resilient portfolio as a long term investor." Temasek is a major shareholder in the city-state's key companies, such as Singapore Airlines, Singapore Telecommunications and DBS Group Holdings. As such it had 26% of its portfolio in Singapore, and another 40% in the rest of Asia as of March last year. Temasek is expected to release a detailed performance for the latest year in September.

http://www.tremeritus.com/2014/02/23/gic-continues-to-use-officers-involved-in-insider-trading/ GIC continues to use officers involved in insider trading February 23rd, 2014 | Author: Editorial A reader has written in to let TRE know of a case where GIC officers caught for insider trading were allowed to continue to work in GIC. The insider trading case involved 3 GIC staff in 2003: Lim Kee Chong, Teng Cheong Thye and Choo Yong Cheen. The case surfaced in 2004 and was reported by international media when the Financial Services Agency (FSA) and the Securities and Exchange Surveillance Commission (SESC) of Japan reported the matter to the central bank of Japan. The Associated Press reported the incident on 21 Oct 2004 [Link]: Singapore’s central bank said Thursday it has fined three employees of the government’s secretive investment fund for insider trading involving shares of a Japanese financial company. Lim Kee Chong, Teng Cheong Thye and Choo Yong Cheen were fined a total of 710,000 Singapore dollars (US$422,700; euro 346,000) for the offense, the Monetary Authority of Singapore said in a statement. The employees of the Government of Singapore Investment Corp., or GIC, sold the shares of Sumitomo Mitsui Financial Group Inc. last year after obtaining confidential information that the company planned to issue new shares, the statement said. When news of the issue was made public, investors sold the stock due to fears that the additional supply would reduce the value of Sumitomo Mitsui’s existing shares. By selling the shares before the announcement, the employees avoided a loss of S$710,000 for the GIC – the same amount they were fined. Singapore’s Securities and Futures Act imposes fines of up to three times the profit – or loss avoided – from insider trading. The GIC wasn’t penalized and the employees will not face criminal charges, the statement said. TRE was not able to find the said statement on MAS website anymore. However, we were able to find an old statement on FSA website. FSA is the Japanese government organization responsible for overseeing banking, securities and exchange, and insurance in order to ensure the stability of the financial system of Japan. The agency operates with a commissioner and reports to the Minister of Finance. It also oversees the Securities and Exchange Surveillance Commission (SESC) and, the Certified Public Accountants and Auditing Oversight Board. According to the 2004 statement from FSA website [Link], the 3 GIC staff did “insider trading involving Japanese securities market”. It said that the kind of insider trading committed is called “cross border transaction” which is a securities transaction in a Japanese securities market by a foreign resident. FSA further said, “The enforcement action by MAS has come as a result of our request of investigation into and providing information of a suspicious case of insider trading, which was detected by the Securities and Exchange Surveillance Commission of Japan (SESC), based on the bilateral Memorandum of Understanding (MOU) with MAS on the sharing of information on securities matters.” Excerpt of the statement has been screen captured by TRE and appears below: The TRE reader wrote: The leader, Mr Lim Kee Chong, settled the civil suit against him. Two others, Teng Cheong Thye and Choo Yong Cheen, were also found guilty in the civil suit then. They accepted the civil suit and were fined various amounts and were also suspended from work. They remained in GIC. Teng left GIC in late 2012. Both Lim and Choo are Managing Directors of GIC now. In fact, Lim is the Group Deputy Chief Investment Officer. A check by TRE on GIC website [Link] confirmed this. Indeed, Lim Kee Chong is now the Deputy Group Chief Investment Officer: Choo Yong Cheen is part of the GIC Investment Groups (Special Investments). He is currently in-charge of direct investments in Asia as well as funds and co-investments in Asia and the emerging markets: The TRE reader further added: Based on the MAS’s Guidelines on Fit and Proper Criteria (revised on 7 August 2012), one of the factors that is relevant to the assessment of the honesty, integrity and reputation of a relevant person is in clause 13(i) of the Guidelines: has had any civil penalty enforcement action taken against it or him by MAS or any other regulatory authority under any law in any jurisdiction. He then asked the following questions: Have Lim and the other two been subjected to the same standards of test that I am told every financial industry practitioner is put through? If not, why? If so, does it mean they were wrongly punished by the 2003 civil penalty? In fact, further checks by TRE revealed that Deputy Group Chief Investment Officer Lim Kee Chong’s name was in the industry-related sanction list of the US-based CFA Institute. CFA Institute [Link], is a global association of investment professionals. The organization offers the Chartered Financial Analyst (CFA) designation, the Certificate in Investment Performance Measurement (CIPM) designation, as well as the Claritas Investment Certificate. On its website, the CFA Institute has a section which lists individuals who, since 1 January 2000, are currently serving public disciplinary sanctions for violations of the CFA Institute Code of Ethics and Standards of Professional Conduct or have resigned their memberships while under investigation for industry-related misconduct. Public sanctions for industry-related conduct may include the followings [Link]: Censure Suspension from the CFA Program Suspension of membership Suspension of the right to use the CFA designation Permanent prohibition/suspension from the CFA Program Revocation of membership Revocation of the right to use the CFA designation Summary suspension In the case of Lim Kee Chong, the CFA Institute conducted its own hearing in 2010 and found Lim to have violated the CFA Institute Code of Ethics and Standards of Professional Conduct with regard to the 2003 insider trading incident. This was later affirmed by another review panel in 2011. This is what the CFA Institute said of Lim: It’s not known if Lim voluntarily disclosed his past insider trading case to the CFA Institute in 2010 or the CFA Institute found out about it 7 years later. It’s also not known if the MAS knew about the CFA Institute’s hearing of Lim Kee Chong case in 2010, 7 years after the insider trading incident. The delay of 7 years to come to the attention of CFA Institute remains a mystery.