Wolf Money(Portfolio update for end July 2024)part 1

 

(Image credit: Westling headline; WWE Booker T)

Booker T or Looker T?

An interest group, SVCA which includes GIC and Temasek submitted a plan to the authorities to revive our stock market about two months ago. The market was once again filled with a glimmer of excitement and hope but the recent comments by GIC and Temasek regarding our market are confusing. It gives an impression, I support the idea of reviving the market but don’t come to us for solution. Temasek goes as far as saying  “Singapore market is not our primary concern”. If anyone is looking for “Booker T” to save the day, one will be hit by the disappointment with “Looker T” showing up instead. 

The commentaries by GIC, Temasek and our minister in charge of finance were disappointing. The problem in our stock market has become a hot potato where no parties want to get involved. Temasek besides having its obligations to the government for managing the state funds. In my view, it acts as an implied custodian of the wider Singapore market given their substantial holdings in TLC listed on SGX. Will it be better for Temasek to put in more capital in Singapore? A bet in on the Singapore equity market is a bet on Singapore’s future success. Will it be better for Temasek to put more capital into Singapore where the SWF can have more influence and oversight on portfolio companies? Think of it as home ground advantage.

(The growing percentage of unlisted assets in Temasek’s portfolio)

With more than 50% of funds invested in unlisted assets including private equities. Is it prudent to have large amounts of state funds locked up in unlisted investments? Temasek’s unlisted portfolio has gone from 33% in 2015 to 52% of the total portfolio currently. Can some of the unlisted companies be listed? What if the state needs the funds back due to a black swan event? Could our SWF find buyers for those unlisted assets on a short notice? When it comes to managing money, it is always best to avoid a WWE smackdown. Where Were the Exits? I am taking nothing away from the hardworking executives at Temasek for putting their hours of dedication into this thankless job. A detailed explanation on the unlisted assets, especially those lesser known names in the annual report, could help me as a layperson to understand the good work done by our SWF better.

Finally, congratulation to Dante Chen for being the first Singaporean wrestler in WWE. He is now having the time of his life, fulfilling his childhood dream to be a wrestler for the WWE.

(Source Dante Chen Instagram; The first Singaporean wrestler in WWE)

Market regulation vs buyer beware

I had a good long conversation with a long-term observer of the exchange. I summarised, in the spirit of his words; “less regulation is better for the market. If we want to bring back the vibrancy of the market, we can’t have tough rules and expect listings and liquidity to come back to our market. In short, less is better. The stock exchange serves its function of a facilitator for trade. Many criticisms of the exchange are unwarranted in his view. He is against the idea of selling our stock exchange to another mega-stock exchange group, which I have suggested as a last resort if no one is interested in reviving our market. In his view, again, a sale will mark the end of the Singapore market. A profit-for-acquirer will ultimately levy some form of fees on the service which the local investors have been getting for free. One example is the free CDP account we are enjoying now. There is also the risk of the Singapore market not being given enough attention in a bigger stock exchange group, relegating our exchange to the lowest rank of priority within a larger group. He felt the government should always be the last place to look for solution to private sector problems. Past stock market crashes and the subsequent complaints by retail investors have resulted in having more Draconian rules imposed on the market operator. It might be one of the reasons for the government not interfering with the internal works of the market now for fear of another push back. The current problem is a liquidity problem and the solution could be in the way how we organise our savings. The money is there, but there are no ways for the money to recycle back into our stock market. He suggested local pensions and insurance funds doing the heavy lifting”. Those views are valid and legitimate. I respect his views as much as those having opposing views, given I have listened to both sides of the argument. I always like to go onto the middle path, sensible regulations is needed. There is always a role for the third hand. Striking the balance between regulation and risk-taking is critical. Discussions should be conducted respectfully. No one should feel their views are superior to others. No matter what differences we may have. Our goals are not very different from each other. The aim is for a good market to serve us. I like to say a thank you to those who have grown a seed in my train of thought on this issue.

We can’t live in the past if we want a good stock market. For example, do we close down a hospital if a few patients complain or does the hospital strives to improve their service to overcome the complaints? I don’t dismiss complaint or feedback as an entirely bad thing if they are reasonable. If you look around us, complaints and our attitude towards solving our problems head on have brought Singapore from third world to first world. The regulator acts as an adjudicator of the market, ensuring a fair and level playing field for everyone, pulling the string at both ends. Some people might be better off and some people might come out worse investing in our market. There is no replacement for buyers beware. A vibrant and an orderly market could be achieved if our stakeholders(regulators and investors) can afford some risk-taking. Thousands of jobs will be at risk if nothing is done. A few disgruntled investors complaining about their past investments turning sour to the authorities shouldn’t be the main reason to hold back any improvement to our market, although I am sympathetic to those investors whom have suffered due to the bad actors of our market. I am for regulation to come down hard on those bad actors for defrauding investors.

There is a need to think out of the box to get around the problem. There are deep-seated issues we need to tackle. They are by no means easy to fix. The recent uptick in our stock market buys us precious time to solve the problem, it shouldn’t be viewed as business as usual. There is a time for conversation and there is a time for follow-up action. Now is the time to set the motion with all the good suggestions given by many like-minded people who care about our stock market. There are many suggestions worthy of consideration. I will let the authorities do their work quietly. Whether one’s view is coming from the point of regulators or views of retail investors. We all want our stock market to work for us and contribute to the growth of our financial sector. Lone Wolf Investor would like to be part of the revival.

As we sing to the familiar theme of NDP song in Aug.

 “This is home truly

Where I know I must be
Where my dreams wait for me
Where that river always flows
This is home surely
As my senses tell me
This is where I won't be alone

For this is where I know it's home”

There is no replacement for homes and my investment home is Singapore. Happy National Day, Singapore!

Part 2 coming up shortly.

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