Analysts say investment company could be eyeing long-term returns
By
Francis Chan
TEMASEK Holdings confirmed yesterday it could raise its stake in Britain's Standard Chartered as part of a rights issue.
Analysts say the move appeared to be an example of Temasek jumping in at cheap prices seeking longer-term returns.
Temasek, already the London-based bank's biggest shareholder with a 19 per cent stake, has agreed to act as underwriter for part of its £1.8 billion (S$4.1 billion) rights offering announced on Monday.
A Temasek spokesman told The Straits Times its stake in Stanchart could rise as a result of the rights issue. Industry sources say its stake could go up to 22 per cent, if other shareholders decide not to take up their entitlements and Temasek steps in.
Temasek recently raised its stake in financial giants such as Merrill Lynch and Barclays. That, despite the value of initial investments plummeting due to current market turmoil. Analysts and economists The Straits Times spoke to said Temasek's latest move might be intended to mitigate losses from past investments.
'But that's the same, on the whole, for everybody,' said Mr David Cohen, an economist at Action Economics in Singapore.
'(But) there should be some bargains out there and Standard Chartered seems like a viable investment for the long term, and with patience, they can do well.'
The discounted 390 pence which Temasek has been offered to buy Stanchart's shares means it will buy shares of the third largest British bank for less than a fifth of its December peak.
Bank shares around the world have tumbled about 60 per cent in value so far this year, but market watchers generally say they will not be surprised if Temasek takes up the entire third of the rights issue.
Most believe that Temasek could do so because, unlike plain vanilla hedge funds, it is not susceptible to pressures from redemption calls in these uncertain times.
'They (Temasek) are not exposed to the same sort of pressure as some institutional investors are in right now,' said Mr Cohen. 'So I think they can afford a bit more patience than, say, some hedge funds that are getting calls for redemption as early as the end of the year.'
Mr Roger Nightingale of Pointon York in London told Bloomberg yesterday that an investor would probably buy assets on 'a long-term basis at a very low price'.
'(And) Stanchart has got a substantial part of its business in relatively strong, fast-growing parts of the world,' said the global strategist, who manages a portfolio of about US$1.5 billion (S$2.3 billion).
Late yesterday, Dow Jones Newswires reported that a person familiar with the matter said Government of Singapore Investment Corp (GIC) is not planning to buy more shares in Citigroup, 'at least for now. So their stake will be diluted'.
In January, GIC bought US$6.88 billion in Citi preferred shares which, if converted to ordinary shares, would give GIC a 4 per cent stake in the US bank.
On the GIC's rumoured side-step on Citi, Mr Cohen said: 'That's somewhat of a different attitude right now because maybe Citigroup is under a little more pressure and a little more strain than Standard Chartered.'
'There should be some bargains out there and Standard Chartered seems like a viable investment for the long term, and with patience, they can do well.' Mr David Cohen, an economist at Action Economics in Singapore
