Singapore's Outperforming Merrill Investment

The FT says today that the government of Singapore's $23-a-share investment in Merrill Lynch (MER) was worth just $12.10 per share at the end of 2008, a drop of 47%. A paper loss of more than $2 billion is tough for any investor to swallow, but for a stake in an investment bank bought at the end of 2007, this is actually an impressive outperformance.

Obviously, a stake in Bear Stearns or Lehman would be worth much less. But look at Morgan Stanley (MS), which fell from $53.11 to $16.04 during the course of 2008, a fall of 70%. Even Goldman Sachs (GS) fell from $215.05 to $84.39: a fall of 61%.

What's more, it's unclear where the $12.10 figure comes from: as the NYT notes, Merrill shares actually closed at $15.83 apiece on the last day of the year. Which would put Singapore's Merrill loss at 31%, significantly outperforming the S&P 500.

So yes, Singapore lost money on its Merrill deal. But in the annals of bad banking investments, this one's quite a small mistake, in comparison to say Texas Pacific's recapitalization of Washington Mutual.

Comments

[CCS:]

Dumb arse Felix. You called losing $2 billion being outperforming. Have you ever been to Singapore? Do you understand the government or the media? Don't write stupid shit about some tiny island 10,000 miles away from your PC. Idiot doesn't know what he is talking about.

Jan 08 01:41 PM

[ScottEX:]

I lived in Singapore, worked for ICAP as interbank broker... I'm glad they lost money, it's a backwards country with no respect for human rights. The government deserves to lose all of the money that keeps it in control and enables them to hash out sick punishment on relatively innocent people.. I spent a day in court and saw 30 men get six months and a torturing for working illegally (building all those shiny towers).. With all the money there they can basically torture people all they want. It's a sick and backwards state, they deserve nothing but some time in Gitmo...

Jan 08 02:44 PM

[Peak:]

Hi Mr. CCS:

Hope you live in the US where illegal immigrants can come to this country to work, send money home, buy a house without verification of income and legal status. I guess this is human rights. Man, you must have a bad day in Sg or you must be a illegal immigrant in Sg. Come to America!

Jan 08 03:00 PM

[Ting:]

No one is discounting the fact that a huge amount of money is lost. The key point is well summarized in last sentence that in the context of market-wide sharp declines, the Sing government did pretty good.

Jan 08 03:55 PM

[CCS:]

I used to live in Singapore for 5 years. I am now living in the Bay Area of United States of America. I agree with everything ScottEx mentioned. It is a sick country with no freedom no democracy. It is worst than a communist country. Tamesk Holdings is the government investment arm. It uses the people pension fund for its investment with no worst transparency that Dylan Ratigan can imagine. I can write hundred of horrible things about the Singapore government but you wouldn't want to listen. The point to Felix Salmon is really not to write bullshit about stuff that you don't know and try to smoke your way to readers10,000 miles away from Singapore hoping they are as ignorant as you.

Jan 10 07:59 AM